MSE News: Derbyshire launches cheapest loan rate in six years

Virgin MBNA Amex is offering me 2% Fee 0% Balance Transfer till October 2013. I can transfer into my current account.

So why would I borrow at 5.6%?

Somebody who actually wants to borrow at 5.6% probably won't be allowed to due to credit score.

Maybe we should do a deal?

Hmm, that's an interesting business model.

LOAN SHARKS'R US

We source funding from people with good credit scores who stooze from 0% BT with 3% Fee, as well as people who are suffering from low deposit returns. We lend to poor people who cannot get cheap credit elsewhere.

Obviously nobody will pay us back if we don't enforce it.
So we have to institute a two tier system.

1. Lower interest rate, say 8%, for Collateral, in the pawn broker model.

2. Higher interest rate, say 12%, and you sign over your organs. We come and harvest your organs if you default. The Shylock model.

It solves three problems:

1. Low return for savers.

2. Poor people denied access to credit.

3. Shortage of organ donors.