Helpnote – Finance

 

Radiocentre has recently put together advice that has been confirmed by the FCA with a view to reducing unnecessary legals in credit ads. This can be found here.

Drafting adverts for finance (such as car ads) seems to give many people headaches so we have written a few example scripts highlighting the kinds of things clients want in their ads and the legals that are required as a result.
Cost of credit – “£239 a month”.
When money is borrowed there is usually a charge for doing so. In most cases this charge involves an interest rate applied to the repayment. Whenever a monthly or weekly payment amount is included in an ad where an interest rate is charged then a full Representative Example is required.

CROWD VO: Yes the Hajime comes with climate control fitted as standard.
MVO (as if reading): and the MP3 dock and DAB, the parking sensors?
CROWD VO: All included.
MVO: Oh hi! You’ve just caught us getting ready for Churlingham Motors’ launch event for the Toshigo Hajime this Saturday.
MVO: (to the crowd) Okay, guys, break for five.
MVO: (to the listener) It’s our latest hybrid, and it can be yours for just two thirty-nine a month. And if you buy on Saturday, you could win a Caribbean Cruise to celebrate!
MVO: Representative example: Cash price 20,914. Amount borrowed 15,914. Total payable 23,635. Deposit 5,000. Fees 10 pounds. 35 payments of 239. Final payment 10,260, x% fixed interest and, guys?
Crowd VO: Representative 7.1% APR (cheers).

In the above example, “two thirty-nine a month” includes a cost of borrowing, so triggers the full Representative Example. All items listed in the above Representative Example, including the text “Representative Example”, are required by legislation.
Rates of Interest
If an ad includes an interest rate, it needs to be stated as “Representative n% APR” and must be accompanied by either a full Representative Example; an incentive to borrow (anything that encourages someone to buy on finance rather than in cash); a comparative indicator (anything that suggests that buying on finance from the particular outlet, or at the current time, compares better than other outlets or other times); or the suggestion that credit is being offered to someone who would ordinarily be turned down. Most commonly an incentive to borrow or a comparative indicator is used, so let’s look at those.

CROWD VO: Yes the Hajime comes with climate control fitted as standard.
MVO (as if reading): and the MP3 dock and DAB, the parking sensors?
CROWD VO: All included.
MVO: Oh hi! You’ve just caught us getting ready for Churlingham Motors’ launch event for the Toshigo Hajime this Saturday.
MVO: (to the crowd) Okay, guys, break for five.
MVO: (to the listener) It’s our latest hybrid, and with a great range of flexible finance offers, there’s never been a better time to buy.
MVO: So why not see it for yourself? If you buy on the day, you could win a cruise!
Crowd VO: Representative 7.1% APR (cheers).

The statement “there’s never been a better time to buy [on finance]” the sentence qualifies as a comparative indicator. It’s important to note that whereas a statement of interest requires an incentive to borrow or a comparative indicator, the reverse is also true. If you include an incentive to borrow or a comparative indicator in a script, then you need to include the “Representative n% APR” statement too.
Interest Free Offers

There is no requirement to quote the representative APR for 0% finance offers. Stating “interest free” or similar is sufficient.
Because 0% finance deals have no interest (and, therefore, no “cost of credit”), if the deal has no other charges associated with borrowing money, all the ad needs to do is make clear the total cost of the vehicle. This could be done by providing deposit and final payment information and the length of the agreement or the total number of payments.

CROWD VO: Yes the Hajime comes with climate control fitted as standard.
MVO (as if reading): and the MP3 dock and DAB, the parking sensors?
CROWD VO: All included.
MVO: Oh hi! You’ve just caught us getting ready for Churlingham Motors’ launch event for the Toshigo Hajime this Saturday.
MVO: (to the crowd) Okay, guys, break for five.
MVO: (to the listener) It’s our latest hybrid and can be yours interest free for as little as five eighty-one a month for three years with no deposit, and a final payment of just twenty-five sixty-five.
MVO: So why not see it for yourself? If you buy on the day, you could win a cruise!
CROWD VO: Can we go too?
MVO: No. No you can’t.
MVO2: 0% Representative APR

In the above example, a monthly amount of £581 is quoted, and as this is a 0% finance deal, requires the inclusion of “three years with no deposit and a final payment of just twenty-five sixty-five”. Given that there is no deposit, you could just as easily omit “with no deposit” and still be compliant, because you have still given the total cost of the vehicle.
“Only £N Deposit”
We take the view that quoting a deposit qualifies as an incentive to borrow, so if an ad mentions the deposit, then the Representative APR is required.

CROWD VO: Yes the Hajime comes with climate control fitted as standard.
MVO (as if reading): and the MP3 dock and DAB, the parking sensors?
CROWD VO: All included.
MVO: Oh hi! You’ve just caught us getting ready for Churlingham Motors’ launch event for the Toshigo Hajime this Saturday.
MVO: (to the crowd) Okay, guys, break for five.
MVO: (to the listener) It’s our latest hybrid, and you could drive yours away from as little as £5,000 deposit.
MVO: So why not see it for yourself? If you buy on the day, you could win a cruise!
MVO: (to the crowd) What is it we have to say now?
Crowd VO: Representative 7.1% APR (cheers).

In the above example, a deposit of £5,000 is quoted, requiring the inclusion of “Representative 7.1% APR”.

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