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

[Deleted User]

aoleks said:

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.

You say that you are not talking about the number, but then say you are versed in maintaining your score and it's as good as it can be.

This seems to be contradictory as you must be aware that the score you see is never seen by lenders and is never a factor in whether they will lend to you. If you don't meet their internal criteria, then a perfect score is as useful as a chocolate teapot.

You say you can't have a better record, yet you said yourself, you are a resident here, not a citizen, a distinct legal separation so there is indeed a good and valid reason why you are in the 49% - you don't meet the lender's criteria.

If you have a massive savings account and earn all this money why are you even after a loan? Savings paying 0.5% interest vs even a prime loan is a no brainer. 

ManyWays

Ebe_Scrooge said:

If I'm honest, I find this a somewhat strange post, not really sure what useful information you're trying to gather?

I dont know what MSE campaigns are looking for but there is an interesting question about whether the lenders are being accurate when they quote APRs.  if they say 7% that is supposed to be the average of the loans they give in response to that advert isnt it? But is this checked up on?

No-one would care if it turns out to be 9% or 5% but what if it turns out to be 13% or if on every ad they are always over? 

FWIW I suspect the high interest credit builder cards are much worse at this than loans. 

[Deleted User]

ManyWays said:

Ebe_Scrooge said:

If I'm honest, I find this a somewhat strange post, not really sure what useful information you're trying to gather?

if they say 7% that is supposed to be the average of the loans they give in response to that advert isnt it? 

No. The 7% is the representative rate, not the average. That's what a lender needs to give to 51% or more of successful applicants. 

If you start giving falling below that figure, you're faced with the unattractive prospect of having to give it to high risk applicants who wouldn't normally merit the headline rate. And you don't want to be the one breaking that news to your CEO. 

[Deleted User]

aoleks said:

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.

1.  the word you're struggling for is 'history' and 'management'  -  a lender is looking through your financial affairs to evaluate how you handle your business affairs, be it on a large scale or small, it's what they have to evaluate your risk on.

2.   i see your point, yes, it can be like that on here.

So, to those others -  the nature of the business world is risk assessment - it will always be this way, you're looking at it in a personal, individual, way and it's not the way to carry out our/your business - think bigger picture.

Bigphil1474

I applied for a loan with Sainsburys in 2020. I normally borrow from my bank but, due to covid, they were limiting loan amounts and I couldn't borrow enough to replace my car which was needed for work. My bank offered me around 2.9% rate.

I applied at Sainsburys as I had received an email offering me a loan at roughly the same rate (can';t remember exactly but it was about 3%), and after doing some searches and not finding better elsewhere, thought I'd apply.

Had to go through the entire process of applying for the loan (maybe an hour online), and then when I got to the end it told me the rate was 7.9%. By that time, I couldn't be bothered doing any more, needed the money, could afford the repayments, so took the loan.

The loan is being serviced fine, but I think if the rate being offered to me was indicated sooner in the process, I would have probably looked elsewhere. I was an existing Sainsburys customer so they had my info.

Ebe_Scrooge

Bigphil1474 said:

The loan is being serviced fine, but I think if the rate being offered to me was indicated sooner in the process, I would have probably looked elsewhere. I was an existing Sainsburys customer so they had my info.

What you need to understand is how the process works.  You start by filling in all your details.  The final step is for a search to be performed on your credit file.  It's only when they've got that data and churned it through their systems that they decide whether, how much and at what rate to lend to you.  That's why you have to wait until the final stage before a decision can be made by them.

The fact that you're an existing customer has very little if any bearing.  Yes, they know how you've conducted your account with them.  But for all they know, you may have 25 other lines of credit on the go, all of which you've defaulted on - they won't know this until they've searched your credit file.

Nebulous2

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.

There are lots of issues with that, limiting the pool to those criteria cuts far too many people out. 

What about somebody staying with their parents rent-free and earning £30k? 

Are they a higher risk than someone on £30k with a mortgage and 3 dependents? 

In addition to the potential borrowers being more diverse than your model assumes, the model would need to be dynamic, not static. What happens if you get a lot more applications from potential borrowers with £50k incomes and no dependents? You can borrow more at a slightly higher rate than the last lot, bur it means the £30k earners now need to pay 5.5% for your lending to be profitable. That would be difficult to do if you have said they will get 4%

MSE_Laura_F

Thanks for everyone who replied earlier this year.

I wonder if it's possible to get any more examples (from within the last 10 years) of being offered a higher APR than advertised.

And if you can remember, how much higher was it?

Thank you.