M&S Loan interest raise at last minute

Dudd

I normally "game" the credit card system when I want to borrow some money, but I've got a bit bored of that recently so thought I'd try a cheap loan instead. I used the eligibility checker and applied for the best loan on offer with M&S at 2.9%. I was planning on paying it back early and it had pretty much zero penalty for doing so. I applied successfully, as expected because I have an excellent credit rating and had used the eligibility checker on Moneysavingexpert and on the M&S site. I then received an email saying congratulations your loan has been approved, with no other information in it. It wasn't until the paperwork arrived that buried in the small print the interest rate had gone up to 5.9%, more than doubling the interest I would need to pay over the life of the loan. I phoned M&S who gave the reason for the rise as the fact that my credit history showed I'd never had a personal loan before. It didn't matter that I had a mortgage, car PCP, an excellent credit rating and had never missed a payment.
Needless to say I wont be taking the loan out as I can move the money around using my existing credit card offers at a much better rate without having to apply for anything, without a credit check and without having to argue with a loan company.

How ridiculous!

Sncjw

It will say your interest rate is subject to a credit check. It’s not sneaky

Dudd

It did say that it was subject to a credit check, but then there was no mention in the acceptance email that the interest rate had changed and it wasn't called out in the covering letter. When I phoned Marks and Spencer they advised they were receiving a lot of complaints about this, and they were all being escalated. If I needed the money for a time sensitive reason this would have left me with no time to sort an alternative. I thought it fair to warn others.

DCFC79

Oh an excellent credit rating definitely should get you the best rates, if only lenders can see the score.

Exodi

Whilst I agree with your views on the increase in interest rate being more prominent, you've fallen into the age old trap most people do when they use eligibility checkers;

[1] Assume a high credit score makes you a perfect borrower. Lenders don't even see credit scores. My partner who has never used any form of credit (lived at home until mid 20's) has a 999 score on Experian...

[2] Disregarding affordability. You may have a mortgage and PCP of which you've never missed a payment - the lenders may feel that with such outstanding debts you are less secure than someone that doesn't have a mortgage.

[3] Disregard lending criteria. Each lender is different, and whilst we don't know their criteria, they may have rules where they don't offer headline rates to people with any debts other than mortgages for example.

The headline rate is offered to 51% of applicants and unfortunately you're not one of them. You would not believe the amount of people that come on these forums waving their magic 999 credit scores, whilst simultaneously in debt up to their eyeballs. One would ask why you would need a loan in the first place if it's not urgent, you mention you'll juggle it on credit cards? I won't gauge into your personal finances but you don't sound like the perfect borrower.

To be honest though, 5.9% is still a pretty good rate, I certainly wouldn't be upset about that! The last person I replied to is paying an 80% APR loan!

iolanthe07

I have an excellent credit rating

No potential lender sees your credit rating. It is a made up number concocted by the credit agencies and is pretty well meaningless. What lenders do see is your credit history.

Clive_Woody

Dudd wrote: »

I wont be taking the loan out as I can move the money around using my existing credit card offers.....

Maybe your current access to so much potential borrowing resulted in you being considered a higher risk, hence they adjusted their APR to reflect this.

Your credit report will show how many credit cards you hold and their limits, which may have been a concern for M&S.

phillw

iolanthe07 wrote: »

I have an excellent credit rating

No potential lender sees your credit rating. It is a made up number concocted by the credit agencies and is pretty well meaningless. What lenders do see is your credit history.

Why does everyone need to be so pedantic.

He obviously meant that his credit history was excellent.

Exodi

phillw wrote: »

Why does everyone need to be so pedantic.

He obviously meant that his credit history was excellent.

Most people that come on this forum mean credit score - the majority actually cite their 999 Experian score.

foxy-stoat

The weekly,"I have been scammed by M&S as I didnt receive the lowest interest rate subject to application" thread. You wont be the last this month.

Very much doubt it was "buried in the small print", it was probably one of the first things in the credit agreement.

If you were going to pay it back early then it wouldn't of made a lot of difference, far from ridiculous.

phillw

Exodi wrote: »

Most people that come on this forum mean credit score - the majority actually cite their 999 Experian score.

You are instead expecting them to post their entire credit history? Good luck with that.