Cheap Loans

quensh

Can i offer a word of caution regarding the headline about cheapest loans (on MSE website as 5%) I followed the link initially to Dervbyshire BS but half way through this becomes Nationwide BS no real problem here so far. I put in all the details re the loan i wanted to buy a car and ultimately came to the page where it told me my application was successful. It then asked for bank details and direct debit details so that the approved loan could be finalised. I did all of this and then got a final screen telling me that my loan application will now be considered and that following that consideration "Quoted Interest rates may change". Its now been 24hrs and i have no received as much as a confirmation email and there is no obvious contact route to chase it up. I am somewhat in limbo as a consequence.
Any thoughts you have would be most welcome
regards
quensh

gb12345

Headline rates are offered to 51% of successful applicants anyone else will get a rate (or declination) based on how they rate against the lender's internal criteria.

quensh

Hi thanks for your reply - can i ask on what basis it is made? Are you speaking on behalf of the lender? If so i would ask - Is it appropriate to tell someone they have a load and confirm the monthly payment and all the details of repayment. Ask for and get all the bank details including direct debit sign off and only then say in effect that you are going to re review, with no additional information and reserve the right to change the cost of the loan? - is that a reputable way to lend money?

gb12345

quensh wrote: »

Hi thanks for your reply - can i ask on what basis it is made? Are you speaking on behalf of the lender? If so i would ask - Is it appropriate to tell someone they have a load and confirm the monthly payment and all the details of repayment. Ask for and get all the bank details including direct debit sign off and only then say in effect that you are going to re review, with no additional information and reserve the right to change the cost of the loan? - is that a reputable way to lend money?

It is made on the basis of the lender's underwriting criteria at the time, which will vary from lender to lender (and can change for a particular lender at any time).

I have no connection with either of the lenders you mention - but have extensive FS experience, so am speaking from personal knowledge.

Seems like a perfectly reputable way to lend money to me and it is one that all the lenders will use. You will be sent an agreement to sign - if you don't like the terms don't accept them.

They advertise their representative rates (and make it quite clear that an individual applicant will get a rate based on their personal circumstances). Until you have provided all your details and they have credit checked you they have no idea what rate they are going to offer you (if any).

The fact you have been referred would indicate that they want to manually underwrite you, rather than automatically accept you.

quensh

OK i think your point of view is interesting - here's what i think is going to happen - If i am right or wrong i will let you know.
i think i will receive a confirmation that i can have a loan but at a rate higher than the one advertised - I think this will be despite the fact that i have a good income own my house outright and have no debt. I think that the 5% rate offered in the advert is actually hardly ever offered to anyone but in fact is more of an enticement to get 'punters' involved. You are quite right i will have the option to accept or reject an offer and if the above proves correct i will indeed reject their kind offer and instead search for a more ethical trader. Watch this space, i will let you know.

Apples2

Headline is offered to 51% of successful applicants. Do you think a main street bank would risk not meeting that requirement?

They consider much more than they can see in your credit file and sadly are not obligated to be specific in explaining why you didn't get offered it.

John1993_2

quensh wrote: »

OK i think your point of view is interesting - here's what i think is going to happen - If i am right or wrong i will let you know.
i think i will receive a confirmation that i can have a loan but at a rate higher than the one advertised - I think this will be despite the fact that i have a good income own my house outright and have no debt. I think that the 5% rate offered in the advert is actually hardly ever offered to anyone but in fact is more of an enticement to get 'punters' involved. You are quite right i will have the option to accept or reject an offer and if the above proves correct i will indeed reject their kind offer and instead search for a more ethical trader. Watch this space, i will let you know.

It is, by law, offered to at least 51% of applicants. If you've got any problems on your credit file then you'll not likely be in that 51%. It sounds like you already know that that's the case.

quensh

No not at all, i believe my credit rating will be excellent and i have never had as much as a minor wobble with credit in the past. I am basing my suspicions solely on the way i was categorically offered a lone. (The page said quite clearly "Congratulations your application has been approved" It was only after i had completed more pages about my bank details that they then said "we will get back to you". At no point in the process was it suggested that the information or statements they were making are provisional.

quensh

I must be getting tired - I cant believe i just spelled 'loan' as 'lone'.

ch3101

To be honest, right now it is almost 50/50 whether you will be offered 5% APR.

You're saying that the lender isn't reputable though which isn't fair at all. They will assess you as we'll as they can and if they don't want to give you 5% then they won't.

I work for a large lender that offers very good rates as well and it does irritate me when we can't tell people why they haven't achieved the best rate. But then again, if we told people say 100 different reasons, they could all just use fake details to manipulate the system and everyone would achieve headline rate.

Best of luck

gb12345

quensh wrote: »

i think i will receive a confirmation that i can have a loan but at a rate higher than the one advertised

I'd say this is 99% likely to be what will happen.

quensh wrote: »

I think this will be despite the fact that i have a good income own my house outright and have no debt.

The fact you have no debt could be a contributing factor (one of many) as to why you don't get the headline rate - if you've no credit history then there is nothing for them to judge you on, so you are a higher risk.

quensh wrote: »

I think that the 5% rate offered in the advert is actually hardly ever offered to anyone but in fact is more of an enticement to get 'punters' involved.

As others have said, the headline rate has to be offered to 51% of successful applicants

quensh wrote: »

search for a more ethical trader.

Good luck with that - every lender works in the same way. You might get lucky and find a lender whose criteria for the headline rate you meet or you might end up going round every lender not getting the headline rate and trashing your credit history by having multiple searches.