Representative APR???

chigleybottom

What is the point of those so-called advertised APR rates for personal loans? I have just tried a few "personalised quotes" from some of the lenders recommended on MSE for borrowing 8 grand over 12 months.
Bear in mind I am 49 years of age, have been fully employed for the last 29 years and 11 months, paid the mortgage off 4 years ago, have some savings and my only debt as I write is 50 quid on a RBS credit card...PLUS, according to my Experian credit check, my credit rating is 98% out of a possible 100.
TSB offered me 23.9% on £8000, making their total repayment right up there with the most unscrupulous finance houses.
M&S were slightly better at 18.9 % and John Lewis kindly informed me "you are unlikely to be approved".
So let me just get this straight, they don't lend to those who can most easily afford to repay ie people like me, or they pretend you're a financial risk and therefore you have to pay a higher APR (if that's logical I'm a Dutchman) or, as usually happens, they make the repayments so prohibitive you just give up.
Just remind me what the bank base rate is again...oh that's right, still less than 1 per cent. It all makes perfect sense now. :mad:

iolanthe07

They are obliged to offer the representative rate to 51% of successful applicants, but they are under no obligation to offer it to anyone who doesn't fit their criteria for whatever reason, criteria which they rarely reveal. Your Experian credit score is meaningless as Experian don't make loans, and the lenders will not see your score, only your credit history. Don't take it personally - they may just have filled their quota of cheap loans for the month/quarter.

Pixie5740

chigleybottom wrote: »

What is the point of those so-called advertised APR rates for personal loans? I have just tried a few "personalised quotes" from some of the lenders recommended on MSE for borrowing 8 grand over 12 months.
Bear in mind I am 49 years of age, have been fully employed for the last 29 years and 11 months, paid the mortgage off 4 years ago, have some savings and my only debt as I write is 50 quid on a RBS credit card...PLUS, according to my Experian credit check, my credit rating is 98% out of a possible 100.
TSB offered me 23.9% on £8000, making their total repayment right up there with the most unscrupulous finance houses.
M&S were slightly better at 18.9 % and John Lewis kindly informed me "you are unlikely to be approved".
So let me just get this straight, they don't lend to those who can most easily afford to repay ie people like me, or they pretend you're a financial risk and therefore you have to pay a higher APR (if that's logical I'm a Dutchman) or, as usually happens, they make the repayments so prohibitive you just give up.
Just remind me what the bank base rate is again...oh that's right, still less than 1 per cent. It all makes perfect sense now. :mad:

The representative rate is the rate offered to 51% of successful applicants so it appears you are one of the 49%.

Lenders consider a number of factors when decided if they should lend to you and at what rate. Some of these factors include your credit history, affordability, and past dealing with the lender in question. However, your Experian credit score is most definitely not a factor considered by a lender, it is nothing more than a marketing gimmick.

Two lenders are offering loans with high APR and the third won't even give you a loan so there is clearly something in your credit history and/or affordability, etc that is making lenders view you as a risky borrower.

Have you checked all 3 of your credit files (not score) to see if there is something such as a default or CCJ that would make you a risky borrower?

You can check your 3 files for free at:

Experian (MSE Credit Club).
Equifax (Clearscore)
Call Credit (Noddle)

[Deleted User]

chigleybottom wrote: »

or, as usually happens, they make the repayments so prohibitive you just give up.

You've got it in one. That's exactly their strategy.

Make the repayments so high that no one will ever take a loan from them.

It cuts down on admin and customer services calls. Pesky customers.

antrobus

chigleybottom wrote: »

...
TSB offered me 23.9% on £8000, making their total repayment right up there with the most unscrupulous finance houses.

Really? Lending Stream's representative APR is 1325%.:)

chigleybottom wrote: »

...
So let me just get this straight, they don't lend to those who can most easily afford to repay ie people like me, or they pretend you're a financial risk and therefore you have to pay a higher APR (if that's logical I'm a Dutchman) or, as usually happens, they make the repayments so prohibitive you just give up.
Just remind me what the bank base rate is again...oh that's right, still less than 1 per cent. It all makes perfect sense now. :mad:

Let's get this absolutely straight. Lenders quote a representative APR to give prospective borrowers an indication of what the loan will cost. Faced with an application they can a) decline, b) accept, or c) accept at a higher APR.

In your case it was c). They think you are a higher risk. That's what lenders are supposed to do; price risk. We have already seen what happens to lenders who don't price for risk. See Northern Rock et al.

If you don't like the price you can go elsewhere, or not buy at all. It's a free(ish) country.