Headline rate 'scam' - M&S Loans

Gaz83

I'm thinking of investing in companies that make computer keyboards.

There's going to be an awful lot of them needed judging by the amount that will be ruined by tears.

regency_man

Nearlyold wrote: »

Finance is quite tightly regulated already as has been stated a number of times in this thread. If you want everyone to be offered the advertised rate, lenders would have to set a rate that covered higher risk customers which would mean that those customers who represented a lower risk would effectively be penalised.

The correct way for this to be EASILY regulated would be to say that bank must offer loan products that have single rate. They can offer as many of these a they want (a 4% loan, a 5% loan, a 10% load etc) - like the Mortgage market. The bank must indicate what circumstances are indicative of achieving acceptance for that particular product (home owner, same address for 5 years, employed etc). Anyone who is accepted must be offered the advertised rate, anyone who is rejected is simply rejected. Their application is turned away and the application is removed from their credit search history - they are back to square 1 and free to look again immediately.

What impact would this have?
Banks would have to more carefully position their products in the market regarding rates, and not go for headline grabbing rates only 51% of applicants can get.
Consumers have a greater ability to find the best deal that suits their personal circumstances and are not penalised for 'shopping around'.

regency_man

Faith177 wrote: »

They are honest and truthful they clearly state the rate before you accept.

They clearly state on all literature that any APR is based on your circumstances. Like insurance an APR cannot be a one size fits all exercise. Why should I be penalised with a higher rate for being good with my money just because someone else isn't?

Unfortunately sometimes life isn't fair and you don't always get what you want especially when someone else's money is involved

You've missed the point - these decisions are not being based on whether people being 'good with their money'. I am very good with my money. They are being based you on not being the 'ideal customer' which is my case was apparently because I'd moved house within the last two years and put 'Miscellaneous' as the loan purpose. Two things, which had I known before applying, would have put me off this particular lender.

Faith177

regency_man wrote: »

You've missed the point - these decisions are not being based on whether people being 'good with their money'. I am very good with my money. They are being based you on not being the 'ideal customer' which is my case was apparently because I'd moved house within the last two years and put 'Miscellaneous' as the loan purpose.

If I didn't know what the intention behind borrowing a sum of money as I'd be weary too tbh.

I used that as one example there are millions of things that I could list that might make be a more ideal customer than someone else. Just for example if Saga did loans I probably wouldn't get a good rate as their core market is those over 50.

Don't forget banks have had to tighten their criteria on lending due to recent events so no wonder they are being more picky

BenjaminClarke

Faith177 wrote: »

They are honest and truthful they clearly state the rate before you accept.

They clearly state on all literature that any APR is based on your circumstances. Like insurance an APR cannot be a one size fits all exercise. Why should I be penalised with a higher rate for being good with my money just because someone else isn't?

Unfortunately sometimes life isn't fair and you don't always get what you want especially when someone else's money is involved

I do understand that APR can't be one size fits all. I am an open minded, liberal guy. I understand circumstances change etc etc etc. However, that's not why the banks do it. They do it for the same reason any shop advertises a sale in their window: to lure in the customers. That much is surely obvious? What gripes me though is the fact that it took two weeks for a response and that the whole process has had a negative effect on our credit ratings. And we all know how important credit ratings are today!

I wasn't expecting to get the 3.4% being offered but 15.8% is crazy. It's actually worse than our credit card because at least with the credit card we could pay it off early, thus reducing the amount of interest paid. The loan we were tied down for the entire five year period at 15.8% of £5000.00!

Gaz83

BenjaminClarke wrote: »

What gripes me though is the fact that it took two weeks for a response and that the whole process has had a negative effect on our credit ratings. And we all know how important credit ratings are today!

Not very, since there's no such thing as a credit rating.

Nearlyold

regency_man wrote: »

The correct way for this to be EASILY regulated would be to say that bank must offer loan products that have single rate. They can offer as many of these a they want (a 4% loan, a 5% loan, a 10% load etc) - like the Mortgage market. The bank must indicate what circumstances are indicative of achieving acceptance for that particular product (home owner, same address for 5 years, employed etc). Anyone who is accepted must be offered the advertised rate, anyone who is rejected is simply rejected. Their application is turned away and the application is removed from their credit search history - they are back to square 1 and free to look again immediately.

What impact would this have?
Banks would have to more carefully position their products in the market regarding rates, and not go for headline grabbing rates only 51% of applicants can get.
Consumers have a greater ability to find the best deal that suits their personal circumstances and are not penalised for 'shopping around'.

"What impact would this have?" Eh let me think about that - customers would routinely lie on their applications to match their circumstances to the published criteria?

BenjaminClarke

Gaz83 wrote: »

Not very, since there's no such thing as a credit rating.

Not sure what you mean... can you please explain?

Faith177

BenjaminClarke wrote: »

Not sure what you mean... can you please explain?

You're rating on things like Experian ect mean nothing despite what they try to convince you with their annoying adverts

Each company has its own lending criteria outside of that score. The score can be an indicator but has little to no bearing on the lenders actual decision

Gaz83

BenjaminClarke wrote: »

Not sure what you mean... can you please explain?

The "score" given by the ratings companies such as Experian doesn't really exist. At least, not any more than it exists to convince people to keep spending money on an Experian subscription.

When you apply for credit, the lender doesn't see that score at all. All they see is the raw information on your credit file. They then use their own internal algorithms to decide whether to lend someone money based on the information on the credit file.

Your score doesn't exist, and is pointless.