Lenders not always required to mention their annual rates

Borrowers may be surprised to learn than lenders are not required to mention APRs (annual percentage rates) in their promotional literature in certain instances.

The Consumer Credit Act, 1995 requires lenders to include APRs in their literature only when they include a rate of interest or a claim regarding the cost of credit.

An APR is defined in the Act as "the total cost of credit to the consumer, expressed as an annual percentage of the amount of credit granted".

APRs are perceived by some as the best means for consumers to compare the cost of different types of credit.

A Family Money reader brought the advertising rule to our attention after receiving a marketing brochure and letter from GE Capital. The letter accompanying the Just the Kick Start You Need brochure said: "Not only can we offer you a loan between £2,000 and £15,000* with repayments that are flexible and designed to suit you, but by this time next week a cheque could be in your hands." The * indicates that approval for the loan is subject to normal lending criteria and that terms and conditions apply.

Some suggestions on how to spend the unsecured personal loan money include: going on a dream holiday; attending your favourite team's sporting final abroad; becoming the envy of the neighbourhood with a new car; brightening your home with new decor; and having the perfect wedding.

Although it sounds appealing, there isn't an APR in sight the reader said. According to a spokesman for GE Capital, APRs are not required in marketing material or advertising unless sample repayments are mentioned.

The European Consumer Centre confirms that this is indeed the case.

GE Capital said: "We go through an affordability process with callers, which is a responsible lending process. We take them through a financial health check and determine what they can afford."

GE Capital said its APRs range from 9.9 per cent to 14 per cent for unsecured personal loans, most of which are over a relatively short term. In other advertisements, the lender has mentioned rates of interest or claims regarding the cost of credit and therefore included APRs as required under Section 21 of the Act.