Fair credit

Lettie80

Hi All,
Just a quick one regarding loans and the Apr band selection.
I have just applied for a £5000 loan from santander ( Christmas special) deal 4.6% over 5 years. I thought great that sounds very reasonable, I receive a letter saying that my application has been successful for a loan of £5000 at 17.6%.
So I phone them up and explain about the lower interest amount, only to be told that because my credit score is Fair (406) that I would only be offered a loan at the 17.6%.
Is it just me who thinks it's mad that they think I'm a bit of a risk yet they they increase the amount I have to pay back each month by £25 pound and £1500 over the five years. I would suggest I would now be more of a risk with the newly inflated Apr. :mad:

BonkersBonkers

If your credit score is 406 I am amazed they offered you a loan at all.

It is your choice -take the loan or decline the loan. Nobody will twist your arm.

Clive_Woody

Lettie80 wrote: »

Hi All,
Just a quick one regarding loans and the Apr band selection.
I have just applied for a £5000 loan from santander ( Christmas special) deal 4.6% over 5 years. I thought great that sounds very reasonable, I receive a letter saying that my application has been successful for a loan of £5000 at 17.6%.
So I phone them up and explain about the lower interest amount, only to be told that because my credit score is Fair (406) that I would only be offered a loan at the 17.6%.
Is it just me who thinks it's mad that they think I'm a bit of a risk yet they they increase the amount I have to pay back each month by £25 pound and £1500 over the five years. I would suggest I would now be more of a risk with the newly inflated Apr. :mad:

Best interest rates are reserved for those considered to be lowest risks, by your logic those at the lowest risk of not repaying should be charged the highest interest. Clearly no sense to that.

They aren't going to offer their best deals to those with a poor credit history.

Wilkins

The increased risk caused by the higher interest rate is tiny when compared with the already substantial risk that you represent to the lender. The loan is priced in accordance with the historical data at their disposal.

~Brock~

So, OP, using your logic I suppose those who present the highest risk of loss to motor insurers should pay the lowest premiums?

Apples2

Lettie80 wrote: »

Is it just me who thinks it's mad that they think I'm a bit of a risk yet they they increase the amount I have to pay back

It isn't just you, everyone else who doesn't repay any money also think they should be offered more at minimal rates.

Ironically poor credit files most often come from not repaying debts which makes the whole APR saga a bit of a moot point.