At iwoca, we pride ourselves on being honest, fair and transparent. Our product is simple and we don't charge hidden fees or tie you in with minimum terms. We’ve put together this guide to help you to understand our pricing structure, the terms that we use to explain pricing and how our rates vary with loan size and duration.

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Key definitions

You may have noticed that we display a representative APR on our homepage. We calculate representative APR in line with the standard, legally required definition but it can be tricky to understand how this actually relates to the amount you pay.

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What is an APR?

APR or “annual percentage rate” is a standard measure of pricing that can be calculated for any type of loan, mortgage or credit card. Every lender has to use the same definition so it’s designed to help you to compare pricing.

The APR is calculated as the total interest rate that you would be charged if you borrowed the full loan amount, kept the funds for a whole year and then paid back everything at the end of the year.

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What is a representative rate?

“Representative” means that at least 51% of new customers are expected to get approved for this rate or better. In other words, if you see “representative” you know the lender is not just showing you a rate that’s only available to their very best customers.

Note that the representative rate published on our homepage is for businesses that get approved for £25,000 or under, in line with regulatory requirements.

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How does the APR compare to the total cost of credit?

Whilst APR can be useful, it may not reflect the total amount you will pay when comparing different types of borrowing:

• Over the same term, you pay less total interest on instalment loans than 'interest-only' loans, even if the APR is the same
• If you keep the funds for less than a year, either because your loan term is shorter or because you repay early, you pay less total interest than the full-year cost reflected in the APR

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If you’re comparing iwoca to alternative providers it’s important to make sure you compare total cost of credit based on how you plan to use the funds, not just the APR. For instance, if another lender charges a large upfront fee, their APR may be lower but the fee will still be due if you repay early. This means they may work out to be more expensive for shorter periods.

Here’s an example of how the total cost of borrowing might compare to the APR for a typical iwoca customer:

• Assume a customer borrows £10,000 for 12 months at a 3.33% per 30 days interest rate
• Each month, they’re required to make a minimum repayment which pays off their accrued interest and reduces their loan balance
• If they just make their minimum repayments, after 12 months they will have paid off their loan. They will have paid a total of £2,290 in interest or 22.9% of their original loan
• However, if the customer decides to repay early, then they'll reduce the cost of their loan. For instance, if they repay the full amount after 30 days, they will only pay £333 in interest or 3.33% of the original loan

As you can see, in both scenarios, the total cost of the loan is much lower than the 49% representative APR might suggest. Use our interactive calculator to see how much iwoca is likely to cost in practice, based on your amount, rate and duration.

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How does pricing vary with loan size and duration?

We offer most iwoca customers a credit line with a maximum term of up to 12 months. The table shows how our representative pricing varies for different loan terms.

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What if I miss a repayment?

If you’re not able to make a repayment, please contact us and we’ll work with you to find a solution.

We understand that in many cases it will have been a temporary issue so once you do miss a repayment, our Payments team will reach out to you with a reminder and we’ll automatically try to take the payment again. Since we expect things to get back on track, we won’t contact any additional guarantors for at least the first 5 days and will wait for 30 days before reporting a missed payment to the credit reference agencies.

Note that we will also not charge any late payment fees or for any letters or calls we make when trying to reach you. Instead, you'll just continue to accrue interest on any outstanding amount at the regular rate.

In cases where a customer is not making repayments and is not willing to come to an alternative arrangement, we may have to explore legal options. This will always be a last resort. In these cases, the customer may be liable for legal fees and court costs.