Have you applied for a personal loan, then been offered one with a higher APR than advertised?

Exodi

Chris_English said:

Exodi said:

Why does there need to be such mystery around lenders affordability assessments?

Because the information is commercially sensitive, and proprietary.

Letting the tail wag the dog here - the information is only commerically sensitive because they have chosen for it to be that way, my post was asking why

Chris_English

Exodi said:

Chris_English said:

Exodi said:

Why does there need to be such mystery around lenders affordability assessments?

Because the information is commercially sensitive, and proprietary.

Letting the tail wag the dog here - the information is only commerically sensitive because they have chosen for it to be that way, my post was asking why

Because it costs a lot of money to develop the algorithms that they use, and they don't want potential customers gaming the system or competitors making use of it.

DrEskimo

Exodi said:

Thrugelmir said:

Exodi said:

Why does there need to be such mystery around lenders affordability assessments?

Risk is priced. Peoples circumstances differ widely. Lenders criteria is commercially sensitive. Easy to compress a discussion in a few words to create headlines rather than educate and inform

Theoretically, what would be the disadvantages of, for example, Nationwide saying:

"To be eligible for a 4% loan, you need to -
1) Be a home owner
2) Have an income of £30k+
3) Have no more than 3 dependents
4) Not have other finance of more than £10k (excluding mortgage)"

I'd imagine there are reasons not to do this (as otherwise they would be). They would get a stream of applicants they're happy accepting - admittedly they would lose the upselling of higher APR products to higher risk applicants.

Even with those criteria, there is still a chance the person will be offered a higher rate due to other risk factors. It's only through a hard search can they gather all the information to quantify their risk.

[Deleted User]

Exodi said:

Thrugelmir said:

Exodi said:

Why does there need to be such mystery around lenders affordability assessments?

Risk is priced. Peoples circumstances differ widely. Lenders criteria is commercially sensitive. Easy to compress a discussion in a few words to create headlines rather than educate and inform

Theoretically, what would be the disadvantages of, for example, Nationwide saying:

"To be eligible for a 4% loan, you need to -
1) Be a home owner
2) Have an income of £30k+
3) Have no more than 3 dependents
4) Not have other finance of more than £10k (excluding mortgage)"

I'd imagine there are reasons not to do this (as otherwise they would be). They would get a stream of applicants they're happy accepting - admittedly they would lose the upselling of higher APR products to higher risk applicants.

Even if it was that simple (which it isn't as other factors are involved) then publishing that would encourage people to game the system. Obviously in that scenario it's a bit more black and white but if it was a more realistic one e.g. minimum income, fixed amount of debt etc, people would gamble on cheating the system and pretending they had more wealth than they did or situation wasn't as bad e.g. if they owed money to a family member that wasn't on any credit system or borrowed money from them to lower their debt so they can get accepted

draiggoch

It would be nice to have an option on the application process to say "No thanks". Many companies still go to the trouble of sending all the paperwork out to you because there is no refusal option on the acceptance page.

Thrugelmir

Exodi said:

Thrugelmir said:

Exodi said:

Why does there need to be such mystery around lenders affordability assessments?

Risk is priced. Peoples circumstances differ widely. Lenders criteria is commercially sensitive. Easy to compress a discussion in a few words to create headlines rather than educate and inform

Theoretically, what would be the disadvantages of, for example, Nationwide saying:

"To be eligible for a 4% loan, you need to -
1) Be a home owner
2) Have an income of £30k+
3) Have no more than 3 dependents
4) Not have other finance of more than £10k (excluding mortgage)"

I'd imagine there are reasons not to do this (as otherwise they would be). They would get a stream of applicants they're happy accepting - admittedly they would lose the upselling of higher APR products to higher risk applicants.

That's a simplification of far far more factors...........

aoleks

to answer the question: yes, every time... apparently I can't be trusted with a few thousands at 3%, but nearly £400k is fine. or a £30k car...

as for other responses, my gosh what a bunch of unpleasant people you are. as if everyone in the 49% is some sort of financial pariah that doesn't "deserve" good treatment from the banks.

banks don't offer the 49% a higher APR because they're (all) higher risk. they do it because they can get away with it. as long as 51% get the advertised rate, the rest can fatten the profits up. my credit score is pristine, yet I will never get the advertised rate because I'm just a resident, not a citizen. nothing to do with risk, affordability or other non-sense you all spew...

PS: not sure what campaign you have in mind, but if you want to change something, run a campaign that aims to "force" lenders to be transparent and publish their methodology for assessments, just like they would give you a product prospect before signing up for insurance. that would solve a lot.

[Deleted User]

aoleks said:

to answer the question: yes, every time... apparently I can't be trusted with a few thousands at 3%, but nearly £400k is fine. or a £30k car...

as for other responses, my gosh what a bunch of unpleasant people you are. as if everyone in the 49% is some sort of financial pariah that doesn't "deserve" good treatment from the banks.

banks don't offer the 49% a higher APR because they're (all) higher risk. they do it because they can get away with it. as long as 51% get the advertised rate, the rest can fatten the profits up. my credit score is pristine, yet I will never get the advertised rate because I'm just a resident, not a citizen. nothing to do with risk, affordability or other non-sense you all spew...

PS: not sure what campaign you have in mind, but if you want to change something, run a campaign that aims to "force" lenders to be transparent and publish their methodology for assessments, just like they would give you a product prospect before signing up for insurance. that would solve a lot.

You won't get a rate based on your credit score because that isn't a thing in the UK, you being a resident is obviously a risk factor as you are more likely to be able to leave for another country that you have ties with than a citizen.

Banks offer 51% as a minimum, not an absolute, but they are not there to lend to people they don't want to.

aoleks

when I say credit score, I mean credit record or whatever you call it, I'm not talking about the actual number. I am more than versed in proactively maintaining my score, have done it for about 10 years. from SARs (equifax, experian, transunion) to active monitoring and remediation, it's as good as it can be.

same bank account since I moved to the UK, no overdraft (never), no missed payments at all, spotless history of paying back loans and credit cards, low to medium utilisation at all times, named on utilities, no hard searches (except for car/mortgage) mortgage, car finance, 0 CCJs, no CIFAS marker, stable address history (3 over 12 years, all properly documented, on electoral roll) and the list goes on. there can't be a better credit record, only equally good ones.

and yet, no lender will offer me anything under 7% or 8%.

the thing is, I don't need the money, we have a household income of just under £100k and I have tens of thousands in savings. I'm just saying, I'm part of the 49% and there's no good or valid reason I shouldn't be trusted with the advertised rate.

my issues is not with banks not lending to me, but the perception of people on this forum, that somehow you must have done something wrong or be a "risky" or "bad" customer not to qualify.

Clive_Woody

At the end of the day banks are businesses, they are not charities, they are set up to make a profit. Their business model includes lending money to people - who they choose to lend money to and at what rate is at their discretion (within laws of the land), they are not compelled to hand out money on a fair and equitable basis based on some assumed moral position.

We have seen from the payday lenders that there are vast numbers of people who borrow money with no intention or no ability to repay it - their business model to support this lending with eye-watering interest rates was seen as exploitative. Many of these companies are now gone and a lot of people now have no option of borrowing money as more conservative lenders are not willing to take the risk.

Borrowing money for something that you could not otherwise afford is not a right, and so long as banks stick by the agreed rules around typical APR advertising then I see no issue with this personally. I am sure others will disagree.