Many borrowers are left scratching their heads when they find that they apply for a personal loan or a payday loan and do not get offered near the rate that was advertised. Particularly those customers with good credit histories and a strong repayment record, they would expect to get the best rates possible.
The reason for this is simple. Lenders are required by law to advertise a ‘representative APR’ which means that it is the rate given to at least 51% of customers. In other words, the average customer will receive this rate and just a little more than half of customers will do so. But for the remaining 49% of borrowers, the rates that are charged could be lower or significantly higher.