APR Representative is the concept of financial services in which the interest rates on credits or loans quoted through advertising media are required to take into account all costs associated with a product, in addition to interest rates.
Video Representative APR
Histori
Over the years, financial services companies have been asked to quote Annual Percentage Values ​​(APR) in any credit or advertising terms. Until 2010, all businesses must comply with the Consumer Credit Rules (Advertising) 2004 (Rule 2004).
However, all EU Member States adopted the new Guidelines in April 2008. This has been applied in the UK by the Consumer Credit Regulations (EU Regulations) 2010, which came into force for all UK companies on February 1, 2011. The guidelines are similar to those applied in the UK, there are some major changes. One of the most important is the introduction of 'Representative APR'.
Maps Representative APR
What the new rule says
The Department of Business, Skills, and Innovation (BSI) is very clear about what a new Directive is for the providers of financial and consumer services in the UK. BSI states:
"If the ad includes an interest rate or amount related to credit costs, it should also include a representative sample.This should contain certain standard information including a representative APR.Example should be clear and concise and should be more prominent than the information that triggered the entry of samples."
Product new rule applies to
The new Directive applies to advertising and credit agreements for all loans to consumers under Ã, Â £ 60.260 excluding:
- agreement secured on land
- business loans (certified)
- investment is governed by OJK
The definition of' representative APR '
APR for financial services products often vary from customer to customer. This is especially true if a loan or a credit card interest rate is determined by a person's income or credit rating.
In addition, the problem with how APR works today is often not taking into account certain costs, such as credit card balance transfer fees or annual fees.
Thus, in cases where APR for financial products may vary, the APR stated on the advertisement must represent the business that the financial service provider expects to come from the ad. The APR representative will also take into account other costs associated with the product (other than the interest rate) and will be displayed in Representative Samples.
A company does its 'typical' APR by considering past business arising from advertising a similar product, ideally for the previous 12 months. The Financial Services Authority (OJK) suggests to companies that their "APR list of your customers has paid over the last 12 months." Your APR representative states in your advertisement no less than APR is paid by at least 66% of consumers on the List.
However, from February 1, 2011, this calculation changed. BSI reports that: "Representative APRs should reflect at least 51% of the business expected to be generated from advertising Standard information should be representative of the agreement to which APR Representatives apply."
A representative APR will be based on a credit limit of Ã, Â £ 1,200 (unless it is known to be lower).
Additional services and security
Other subtle but important changes to the rules now make it important for financial service providers to display, in prominent text, whether there is an obligation on the consumer to enter into another contract (for example, if you must take the compulsory insurance product with a mortgage loan). In this situation, costs should be indicated by:
- no less prominent than standard information
- APR representatives
The nature of any security must also be determined.
References
Source of the article : Wikipedia
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