Santander loan offer - is this responsible lending!?

Peters88

I used a comparison site to see what my options were for getting a loan for a car. I was looking to borrow £20,000 over 5 years and Santander offered the best rate, I think it was via a sub brand called Cazoo or something?
The advertised rate was less than 3% so I went for it and applied, two days later I got the email to say my loan application has been successful, amazing, I log on and read through the terms and conditions ready to sign - and there, in paragraph seven or something ridiculous, right at the end, it states the interest rate I've been given is 18.90% and I'll be borrowing £20,000 and paying back £30,000 - £10k in INTEREST!
Now, I know that the advertised APR is very often not the APR you get granted but, WOW. I am struggling to understand how that is responsible lending from Santander during times like these? Not only that, no where in any comms have they stated they haven't offered me what I applied for, thankfully I am very familiar with reading through paper work and ts and cs due to my job, but I really fear for someone that just scans the documentation and assumes they've been offered what they applied for. 
How is this even legal or responsible?! I did ring Santander and logged feedback with them but not confident anything will change.

DCFC79

Peters88 said:

I used a comparison site to see what my options were for getting a loan for a car. I was looking to borrow £20,000 over 5 years and Santander offered the best rate, I think it was via a sub brand called Cazoo or something?
The advertised rate was less than 3% so I went for it and applied, two days later I got the email to say my loan application has been successful, amazing, I log on and read through the terms and conditions ready to sign - and there, in paragraph seven or something ridiculous, right at the end, it states the interest rate I've been given is 18.90% and I'll be borrowing £20,000 and paying back £30,000 - £10k in INTEREST!
Now, I know that the advertised APR is very often not the APR you get granted but, WOW. I am struggling to understand how that is responsible lending from Santander during times like these? Not only that, no where in any comms have they stated they haven't offered me what I applied for, thankfully I am very familiar with reading through paper work and ts and cs due to my job, but I really fear for someone that just scans the documentation and assumes they've been offered what they applied for. 
How is this even legal or responsible?! I did ring Santander and logged feedback with them but not confident anything will change.

Joe bloggs in the street isable to read the documentation but if he decides not too then thats his choice but he will notice a big mistake when hes charged a higher payment than what he thought it would be.

Is it legal, hell yeah.
Is it responsible again a hell yeah.

If you feel annoyed by it then log a complaint then take it to the FOS.

[Deleted User]

Yes, it's legal and responsible. 

They've identified you as a high risk customer so if you're that desperate for a loan, they're going to make sure they cover their potential losses.  And if the rate also deters you from taking out the loan, that's ok too.

Consider whether you really need to be borrowing such a sum - especially at times like these. Ultimately, the responsibility for your own finances rest with you.

Barny1979

Wouldn't irresponsible lending be offering you more money than originally applied for?

Grumpy_chap

The OP has not set any of this in context:

• Income & assets
• Liabilities & outgoings
• Why the OP needs a car and why a lower cost car can't meet the OP's needs

In my opinion, five years is a very long time for a car loan and if that is the finance period required to afford that car, then the car is not affordable to the OP.

MalMonroe

Hi,

I've seen Cazoo adverts on TV, they focus on selling and financing cars. But they're a broker, not a lender so I guess Santander would be the lender. The founder of Cazoo, Alex Chesterman OBE, is very rich. 

If I were you I'd look elsewhere, and maybe for a car a tad cheaper over a shorter period of time. I've done that loan for five years thing in the past and the interest I paid was ridiculous. Mr Chesterman is rich enough.

That is just my view, of course.

Ebe_Scrooge

Of course it's responsible lending - they've assessed your risk profile and offered you an APR that reflects their assessment.  Irresponsible lending would be if they were to blindly offer you 3% APR without any regard for the risk you pose to them.

Now, irresponsible borrowing ?  Quite possibly.

sourcrates

Irresponcible lending, as defined by the debt charities.

What is irresponsible lending?

If a creditor hasn’t done proper affordability checks, they may give you a loan that’s larger than you need, or that you can’t afford to pay back. This could leave you with a choice of cutting back on your essential living costs to keep up with the payments, or missing payments to the debt which could lead to your account defaulting.

Lending money without properly checking affordability is known as irresponsible lending.

To lend responsibly, a creditor must be confident that you can repay the debt:

• In full and on time
• Without having to borrow more money
• Without falling behind on your existing commitments, and
• Without causing you financial hardship

It is not always sufficiant just to say "read the small print", a lender must be sure the customer is fully aware of the interest rate they will be paying, this is a basic requirement of the lending code, the onus rests with the lender to ensure the terms and conditions of the loan are fully understood by the customer, before they commit to it.

Silvertabby

If you think 18.9% is bad, I've just seen a tv advert offering personal loans for a headline rate of.... 99%.  Surely that can't be legal ! 

[Deleted User]

It surely is.

Barny1979

Silvertabby said:

If you think 18.9% is bad, I've just seen a tv advert offering personal loans for a headline rate of.... 99%.  Surely that can't be legal ! 

If it was, they wouldn't be advertising on TV