Borrowing money guide - our interest rates and APR
A closer look at our interest rates and APR.
Like all other lenders, we charge interest on our doorstep loans. When you're considering a loan, interest rates are something to be aware of, but they can often seem intimidating and confusing.
By giving you all the information we can about the interest we charge, we aim to help you make an informed decision when you borrow from us.
What is interest rate?
Interest rate is the amount you are charged by a lender for borrowing money from them. It is calculated as a percentage of the total amount of the loan. This will need to be repaid along with the original amount you borrowed.
An example of how this works would be, if you borrowed £100 and are required to pay back £180, the interest rate would be 80%.
What interest do Morses Club charge?
Morses Club has a fixed interest rate of 54% on a 22-week loan, 70% on a 34-week loan and 86% on a 53-week loan. This means that depending on your loan term and the repayments you make; you will pay back 54-86% of the amount you borrow in interest.
This might be higher than some other forms of credit, but there are several reasons for this. Our loans start small, which is an option not available to you with some other lenders. We also offer small weekly repayments rather than lump sum repayments, so you can plan around them. Additionally, our agents provide you with a personal, friendly service, and you won't be charged a penny for paying your loan off early.
What is a fixed interest rate?
We offer a fixed interest rate, which means you will never pay more on your loan than you agree to initially. With some payday lenders, you accrue interest on each day you have your loan, as well as each day your repayment is overdue - plus any additional charges. This can make it difficult to get a handle on how much you owe. With a cash loan from Morses Club you don't have to worry about this, as the interest will be calculated up front. This means you'll be aware from the beginning how much you will pay back.
What does APR mean?
APR stands for Annual Percentage Rate and works out what percentage of interest you would pay on your loan over a year. This is calculated by looking at various factors including the interest rate, how often you make repayments and any charges associated with the loan. Lenders are required by law to display their APR to allow people to effectively compare loan products.
What does representative APR mean?
Where the term 'representative APR' is used, this means that 51% of customers will receive the advertised rate or lower. This stops lenders from showing an APR which only a select few customers may be eligible for.
What's the APR on a Morses Club loan?
Our APRs at Morses Club are as follows:
- 22-week loan: representative 716.48% APR
- 34-week loan: representative 466.37% APR
- 53-week loan: representative 280.63% APR
Once you have agreed to your loan and how long you will have it for, the APR remains the same whether you pay back your loan in 2 weeks or 10 months. However, the interest which is used to help calculate the APR is only applicable for the time you take out your loan - so if your loan term is 6 months, you will only pay interest for 6 months.
Using APR to compare loans
APR is a good way of comparing loans which are like for like as you can see which loan is the cheapest. However, all loans need to be suited to the individual, so as well as looking at APR you need to be aware of what your loan term will be and if there are any extra fees and charges when deciding. At Morses Club we clearly display our APRs in order to be honest and transparent with our customers. Our loan calculator gives you a full breakdown of the interest rate, APR and repayments on our loans for new customers. If you have any questions about APR or Interest, our agents and Customer Service Team are there to answer any.
What does low APR mean?
A low APR rate normally means you won't pay as much in interest and additional fees. It's worth noting APR is worked out over a year though, so loans with a longer repayment period will appear to have a lower APR even though you normally end up paying more in interest.