Zopa loans - high interest rate?

SallyJean

I used the Zopa tool to calculate your likely interest rate without harming your credit score. Their advertised representative rate is as low as 2.8. I was given an estimate of around 20%!! I have a good credit rating (checked this recently) and can't see why it would be so high. I recently applied for a Sainsbury's loan and they offered me 5% - not sure whether applying again so soon after would affect their scores?? I am basically wanting to consolidate debts totaling 13,000 (includes a career development loan of 10,000). Any advice would be appreciated!! Thank you

[Deleted User]

Different lenders have different risk criteria. None of these criteria include a CRA's credit rating of you.

People looking to consolidate are naturally higher risk. If you've been offered 5%, and that is lower than your current rates, I would accept it.

StopIt

SallyJean wrote: »

I used the Zopa tool to calculate your likely interest rate without harming your credit score. Their advertised representative rate is as low as 2.8. I was given an estimate of around 20%!! I have a good credit rating (checked this recently) and can't see why it would be so high. I recently applied for a Sainsbury's loan and they offered me 5% - not sure whether applying again so soon after would affect their scores?? I am basically wanting to consolidate debts totaling 13,000 (includes a career development loan of 10,000). Any advice would be appreciated!! Thank you

Ignore the score.


You can't see the reason why Zopa offered you 20% and Sainsbury's 5%, but you can check your credit history to make sure nothing untoward is there.


There are 3 different CRAS and you can check all 3 for free:


ClearScore covers Equifax
Noddle covers CallCredit
MSE Credit Club covers Experian.


It may be that each lender used a different CRA and there's something bad on one of them.


It also be differing lending standards as each lender varies.


Debt consolidation loans are usually higher APR because the lender cannot assume that you'll use the money as intended, so have to base the affordability on the total debt, not just the loan in question.


5% is a good rate, why did you not take it? Can you still do so?

SallyJean

Thank you both - that's really helpful Yes I am thinking I may accept the 5% loan from Sainsbury's. I just wondered why I didn't get the 2.8 - just trying to get it as low as I can really. I heard from a friend that they only give the 2.8 rate to about 50% of applicants though, so perhaps 5% is the best I am going to get!

DCFC79

SallyJean wrote: »

Thank you both - that's really helpful Yes I am thinking I may accept the 5% loan from Sainsbury's. I just wondered why I didn't get the 2.8 - just trying to get it as low as I can really. I heard from a friend that they only give the 2.8 rate to about 50% of applicants though, so perhaps 5% is the best I am going to get!

Maybe because Zopa see you as a risk since it's the money of other savers involved.

Accept the 5% now.

StopIt

SallyJean wrote: »

Thank you both - that's really helpful Yes I am thinking I may accept the 5% loan from Sainsbury's. I just wondered why I didn't get the 2.8 - just trying to get it as low as I can really. I heard from a friend that they only give the 2.8 rate to about 50% of applicants though, so perhaps 5% is the best I am going to get!

Close.


They give 2.8% to 51% of all successful applicants. Not 51% of all people who apply. So 49% of people who get accepted for a Zopa loan will not get that rate.


Alas, it's asking why the trains never run on time. It depends on who you ask, no answer is ever really satisfactory and the trains still don't run on time.