Why Do Bank APR's Differ so Greatly ?

moneysaver6161

I have done as an example a loan of £7500 over 24 months, these are all personalised loan rates using Online banking from all the banks that I have accounts with, all these accounts are used well and never been overdrawn, had charges etc, yet the rates differ vastly for the same loan !, why is this ?.

BARCLAYS 22.9%
LLOYDS 3.4%
HALIFAX 11.9%
TSB 23.9%
HSBC 3.3%

So you have the highest with TSB at 23.9% and the Lowest with HSBC at 3.3%, thats a big difference and a big saving for that loan.

No footprint was left on my Credit File for any of these enquires.

[Deleted User]

Cost of funds, target market, risk, CRA data, exposure, internal scoring....

DCFC79

moneysaver6161 wrote: »

I have done as an example a loan of £7500 over 24 months, these are all personalised loan rates using Online banking from all the banks that I have accounts with, all these accounts are used well and never been overdrawn, had charges etc, yet the rates differ vastly for the same loan !, why is this ?.

BARCLAYS 22.9%
LLOYDS 3.4%
HALIFAX 11.9%
TSB 23.9%
HSBC 3.3%

So you have the highest with TSB at 23.9% and the Lowest with HSBC at 3.3%, thats a big difference and a big saving for that loan.

No footprint was left on my Credit File for any of these enquires.

Maybe because each bank rates you differently, they have entered your data through a system and its come out with an apr.

meer53

For the same reason i can buy stuff at Aldi that costs twice as much at Waitrose for the same stuff !

takman

meer53 wrote: »

For the same reason i can buy stuff at Aldi that costs twice as much at Waitrose for the same stuff !

What because Aldi and Waitress use a different methods to analyse the data held on the CRA about you combined with internal data to decide what price to charge you for food? :rotfl:

It really isn't a very good analogy at all!. The vast difference in the OP's loan rate is purely due to internal scoring differences. If you look at the APR quoted by these banks for the loans the difference in rates will be much lower.

meer53

takman wrote: »

What because Aldi and Waitress use a different methods to analyse the data held on the CRA about you combined with internal data to decide what price to charge you for food? :rotfl:

It really isn't a very good analogy at all!. The vast difference in the OP's loan rate is purely due to internal scoring differences. If you look at the APR quoted by these banks for the loans the difference in rates will be much lower.

It's a perfectly good analogy. Different companies use different criteria to sell the same product.

takman

meer53 wrote: »

It's a perfectly good analogy. Different companies use different criteria to sell the same product.

But like I said in the OP'S case the loan rates are different due to personal circumstances and information. In the case of supermarkets the price difference between Aldi and Waitrose is because the products have ingredients sourced from different locations and are of a different quality level. If you compare the prices of exactly the same branded products then they don't vary as much.

If the OP was comparing the advertised APR's for each loan then their wouldn't be much difference between them and your analogy may be more fitting.

meer53

takman wrote: »

But like I said in the OP'S case the loan rates are different due to personal circumstances and information. In the case of supermarkets the price difference between Aldi and Waitrose is because the products have ingredients sourced from different locations and are of a different quality level. If you compare the prices of exactly the same branded products then they don't vary as much.

If the OP was comparing the advertised APR's for each loan then their wouldn't be much difference between them and your analogy may be more fitting.

The OP's question was "Why do banks APR's differ ?" They differ because they're all using different criteria to offer rates, exactly the same as supermarkets.

I recenty bought a branded product from Aldi which is also sold in Waitrose, there was a £12 price difference.

Pixie5740

moneysaver6161 wrote: »

I have done as an example a loan of £7500 over 24 months, these are all personalised loan rates using Online banking from all the banks that I have accounts with, all these accounts are used well and never been overdrawn, had charges etc, yet the rates differ vastly for the same loan !, why is this ?.

BARCLAYS 22.9%
LLOYDS 3.4%
HALIFAX 11.9%
TSB 23.9%
HSBC 3.3%

So you have the highest with TSB at 23.9% and the Lowest with HSBC at 3.3%, thats a big difference and a big saving for that loan.

No footprint was left on my Credit File for any of these enquires.

As other people have said, each lender has their own way of scoring you based on your credit history, affordability and past dealings with that particular lender. Perhaps HSBC think you manage your accounts better with them than TSB thinks you manage your accounts with them.

I note that these are all soft searches you've done since no footprint has been left on your credit files. You might find that the rate changes if/when you go for a full application with a hard credit search.

SeanG79

Same reason as why do insurance quotes differ from insurer to insurer...?

takman

meer53 wrote: »

The OP's question was "Why do banks APR's differ ?" They differ because they're all using different criteria to offer rates, exactly the same as supermarkets.

I recenty bought a branded product from Aldi which is also sold in Waitrose, there was a £12 price difference.

If your answering the general question asked in the title of the thread then fair enough. But i'm responding to the specifics of the question where the OP has actually been given a different rate based on his personal circumstances.

If i go to Halifax for a loan i might get a rate of 4% but if i go to Santander i might get a rate of 8%. But for you Santander may give you a 4% rate and Halifax may give you a 8% rate. So neither are the cheapest for both of us.

But if i go to Aldi i will always pay the same price as you, just like if i go to Waitrose.

But really the point i'm making is that the difference in rates the OP has been offered is simply more than just marketing differences. The difference between the lowest and highest rate is 7 times more!. I have never seen a product sold for 7 times more in one supermarket than another.

But i feel like i'm spending far too much time discussing a minor point like this :rotfl: