Why have I been offered a higher interest rate than advertised?

We’ve all heard the saying “if it sounds too good to be true, it probably is”.

And unfortunately, in the world of applying for credit, this can sometimes appear to be right – particularly where representative APRs are concerned.  

If you find a credit card or loan deal with an APR that you’re happy with, you might find that when you come to apply, the APR is not what the lender is advertising.

In this blog, we explain why lenders are able to offer different customers different rates and how they’re allowed to advertise one APR and provide another.

That’s not what you said

It’s basic marketing – everybody knows that lenders offer attractive APRs to entice customers to choose their product.  

So if a lender has attached a low representative APR to one of its products, it’s understandable that you’d take note and want to take advantage of it.

It’d therefore be pretty annoying when you come to apply and the APR is different to what was advertised. But how is a lender able to get away with this? Isn’t it false advertising?

Well firstly, no it’s not. A representative APR is a real APR that the lender offers to customers - and actually it’s one that it offers to the majority of its customers.

In fact, lenders have to offer the advertised rate of interest to at least half (51%) of its customers. The other 49% can be offered different APRs.

But why?

So it’s not that the lender is lying - they do offer that rate – it’s just that they are selective in who they offer it to.

The best APR rates are saved for customers with the best credit histories. It might seem counterintuitive to offer the best rates to those who need it the least but, unfortunately, it’s just the way it works and the reward for having a better credit history.

On the other hand if you have a patchy credit history, it doesn’t necessarily mean that the lender won’t lend to you (although it might mean that), but just that they may offer you credit but at a higher rate of interest.

This can feel pretty upsetting and like you’re being denied a good deal, particularly if you’ve spent time researching lenders and products, and found a deal that you’re happy with.

So you then have to make the call on whether you’re willing to take the product at the higher rate of interest or keep on with your search.

The search continues

We’d love to offer you one, but there’s simply not a short-term solution we can give you that will mean you will get the best APR advertised by a lender.

You can take steps to improve your credit history. This shows lenders you apply to that you’re a trustworthy and responsible borrower who can manage their credit, which may open you up to better deals – and lower APRs.

This can’t be done overnight, though. But what we do hope is that this blog has at least helped explain why a lender may offer you a different rate of interest to the one they advertised.