Santander loan offer - is this responsible lending!?

Silvertabby

OK - it may be legal, but it isn't moral ! 

macman

It's not irresponsible lending: it's expensive lending.
The website makes it quite clear that the quoted APR is representative (i.e. only 50% of applicants will secure that rate).

John_

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.

In what way is it being irresponsible? They are quoting the right amount for the risk, they are telling you how much it will cost, and you have the choice to take it or not.

[Deleted User]

I suppose we were due a thread from one of the 49% not offered the representative APR.  

Cazoo's own website states a representative APR of 8.9% so the OP was never going to be offered 3% APR by them.  I suspect that the best rate offered by A. N. Other lender on the comparison site was 3% APR.

Exodi

Peters88 said:

I am struggling to understand how that is responsible lending from Santander during times like these? 

While I abhor the current trend of labelling anything a creditor offers that you don't agree with (and often also agree with but change your mind later on) as 'irresponsible lending', the above sentence particularly stuck out most to me.

So what you are suggesting is that Santander should be encouraging high risk customers to borrow money during a pandemic amidst record levels of redundancies? Would that then be responsible lending in your book?

Ergates

Silvertabby said:

OK - it may be legal, but it isn't moral ! 

That depends on the loan details.  Loans with such high interest rates are generally intended for short periods only.
If you borrowed £500 for a week at an APR of 99% it'd cost you about £10.  Is it immoral to charge someone £10 to borrow £500 for a week?  I wouldn't say so.
If they were setting someone up with such a loan for, say 2 years, so the person ended up paying back several times what they borrowed - then that obviously is not so good.

Exodi

Ergates said:

Silvertabby said:

OK - it may be legal, but it isn't moral ! 

That depends on the loan details.  Loans with such high interest rates are generally intended for short periods only.
If you borrowed £500 for a week at an APR of 99% it'd cost you about £10.  Is it immoral to charge someone £10 to borrow £500 for a week?  I wouldn't say so.
If they were setting someone up with such a loan for, say 2 years, so the person ended up paying back several times what they borrowed - then that obviously is not so good.

Plus I think it gets lost on people on why the interest rates are what they are. Obviously you have the profit element (and luckily as consumers we have the choice to shop around and go with whom we choose) but a big part of what the APR is, is risk.

'Well-Off-William' who earns a high wage, has a large amount of disposable income and has always paid his debts on time, is viewed as low risk to a lender and would receive a low interest rate. The bank are confident he will pay the money back and he gets a low interest rate

'Payday-Paul' on the otherhand, who is unemployed, has very little disposable income, has a high level of debt and has defaulted a few times, is viewed as high risk to a lender and would receive a high interest rate. The bank are not confident he will pay the money back and by offering a higher interest rate, they are able to still make money, despite the high level of defaulting in this 'sub-prime' market.

Unfortunately you see first hand no this forum the sheer level of defaulting that happens in the sub-prime market.