Personal Loans: How to get the UK's cheapest discussion area

In the terms and conditions it states that thats for immediate payment into your chosen account. If you write when you return your signed agreement stating that you do not require this and request payment via bacs this is free of charge but takes up to 4 working days.

Jackie

Arbie wrote:

I have recently applied for an unsecured loan from Moneyback for £13k, assuming (with my good credit history and fairly high salary, and as I'm debt free) I would be offered their typical 5.7%. I was asked by email to call them as 'my decision was now ready'. I duly did, and was told that the rate I would be offered was 6.9% (a £167 increase in interest in real terms). Fair enough - I know I'm not guaranteed their best rate. However, I was unimpressed with the hard sell on payment protection that followed. My call, after being told that I was approved in the first minute, stretched to 17 minutes before I was told that the application was in the post to me. I refused the protection at least four times with a definite 'No, I don't need it', only to be hit with the insidious "But sir, what if you're ill, or what if you die, who will cover your debts?" line every time. I haven't yet decided whether to give them my business - if I do, I may well write and bill them for the mobile phone call!

Rant over.

I had exactly the same experience for a loan of a similar amount, the apr offered was 6.9%. Me thinks you only get the 5.7% if you take the protection.

I told them to stuff it, i'd go elsewhere.

I think Martin's advice in this respect:

Easier to obtain cheap loans

Those without a good credit history will find most ultra cheap lenders either reject them or charge a much higher interest rate. There are no hard or fast rules, but two types of loan which may help:-

* One Rate Only Providers: Most loans advertise typical rates, which means while 66% of accepted customers get the rate advertised, the rest are offered higher rates due to poor credit scores.

Currently the cheapest guaranteed rate lender (ie if you’re accepted this is the loan you’ll get) is the Skipton Building Society via an exclusive arrangement with commercial price comparison website Moneysupermarket (this loan doesn’t exist if you go direct to Skipton).

To qualify you need to be a home owner (though this isn’t a secured loan) over 25 and earn over £15,000. The following are the correct links – Link for £5k to £6,999 loans*; Link to £7k plus loans*.

The alternative provider is the Nationwide which has a guaranteed rate of 6.7% for borrowing from £1,000 up.

uses dubious logic, at best.

I am concerned that the idea that lenders who charge one flat rate to everyone they accept (my emphasis) are more likely to accept your application than those who charge for risk is very misleading, simply due to financial common sense.

Even if lenders offering flat rates get a normal distribution of applicants (which they won't - see later), they cannot profitably lend money at the flat rate to those without a good credit history. The biggest factor in personal loan profitability is NOT the cost of borrowing the funds, but the level of defaults. And those with bad credit histories, on average, have a far higher propensity to default than those with good credit histories.

And, of course, the situation is worse than that.

If company A lends at (say) 6.9% to all customers they accept, they will get a lower proportion of top-rated customers - as the astute ones will go to company B who charge 5.5% (say) to the best customers. So company A's share of top credit scoring customers will be lower, and 6.9% will therefore probably represent a fair rate for those they accept - but there's no "excess" profit from those who "should" have paid 5.5% to cross-subsidise those who "should" have paid 7.9% or higher - who will hence likely get rejected.

In my view, those with excellent credit histories should apply (as Martin says) to the best buy lenders - who price for risk and charge less than those with a flat rate of charge.

Those with mediocre credit histories should (not as Martin says) still apply to the best buy lenders - who price for risk - in the acknowledgement they'll probably get charged more than the best buy rate BUT that they are likely to be accepted. If, alternatively, they follow Martin's advice and apply to the "flat rate" lenders, they'll almost definitely get rejected. If they get rejected by a "pricing for risk" lender then, a pound to a penny, they would ALSO have been rejected by a "flat rate" lender.

There is probably a very narrow band of customers who would get accepted by a "flat rate" lender but priced up above the "flat rate" by a "pricing for risk" lender, but I'm not sure I would do the damage to my credit rating of lots of declined credit applications in order to test this theory.

Arbie wrote:

I haven't yet decided whether to give them my business - if I do, I may well write and bill them for the mobile phone call!

I find it's always worth asking if people will ring you back, if you're on your mobile....ESPECIALLY if they are trying to sell you something! - I'm constantly amazed that they do ring you back very willingly....