Cheap Loan deal - not so much

Phil_Wolvin

Just tried to apply for the current best offer for a £15k loan from Finble advertised as 2.7%.  Got accepted for the load but the APR is now 8.7%.  Has this happened to anyone else?  Is this common across other providers?

[Deleted User]

Yes, it happens to 49% of successful applicants, or thereabouts.  

If your credit history is on the patchy side, look lower down the league table for your next application, to find a lender better suited to your risk profile.

Ebe_Scrooge

As above.  All lenders will advertise what they call a "Representative APR", which they must offer to at least 51% of successful applicants.  Generally those who are offered the advertised rate will be those who match the lender's scoring criteria perfectly.  The remaining 49% of successful applicants will be offered a different rate, which is calculated by crunching your credit history data through their internal algorithms.

I think I'm right in saying that Martin Lewis himself is currently trying to put pressure on the powers-that-be to force lenders to advertise a "typical" rather than a "representative" rate.

[Deleted User]

Ebe_Scrooge said:

As above.  All lenders will advertise what they call a "Representative APR", which they must offer to at least 51% of successful applicants.  Generally those who are offered the advertised rate will be those who match the lender's scoring criteria perfectly.  The remaining 49% of successful applicants will be offered a different rate, which is calculated by crunching your credit history data through their internal algorithms.

I think I'm right in saying that Martin Lewis himself is currently trying to put pressure on the powers-that-be to force lenders to advertise a "typical" rather than a "representative" rate.

He's also angling for 65% rather than 51% so lenders will almost certainly bump their rates up to cover for the extra 14% they have to include

Phil_Wolvin

with a credit score of 999 last time I checked this was certainly a shock...

[Deleted User]

Phil_Wolvin said:

with a credit score of 999 last time I checked this was certainly a shock...

It shouldn't be as no lender ever sees that gimmick score, it is never a factor in lending. Lenders rate you on the data on your file and score you using their own systems that you will never see. That you got rejected is just yet more proof of the pointless nature of the fake scores

Nebulous2

Phil_Wolvin said:

with a credit score of 999 last time I checked this was certainly a shock...

If you go for the top of the league table, you are fishing in a select pool. They can afford to be very picky. Moving down a few places, to 3.2 or 3.3% may produce better results.... 

Emskibee

I had the same thing happen to me, I applied for a loan of 25K with 2.9% APR , repayments of £328 per month found on Money supermarket. When I got approval the rate came through a lot higher at 7.8% with repayments of £385 per month, so Its £50 extra per month and over the term of the loan an extra 5K to pay back in. interest. What can be done about this, I now feel I have no other option but to go for this because every time you apply for a loan Ive heard it affects your credit rating. Mine is good so dont want to damage it due to this trickery by the loan companies!

[Deleted User]

Emskibee said:

What can be done about this, I now feel I have no other option but to go for this because every time you apply for a loan Ive heard it affects your credit rating. Mine is good so dont want to damage it due to this trickery by the loan companies!

What can be done is that you can apply elsewhere, in the hope of getting a lower rate.

You credit score isn't a factor in lending (if it was was, you'd have got the headline rate), so don't worry about changes to the number.  A couple of applications won't have any significant impact, even if there was trickery afoot, which there isn't.

[Deleted User]

Emskibee said:

I had the same thing happen to me, I applied for a loan of 25K with 2.9% APR , repayments of £328 per month found on Money supermarket. When I got approval the rate came through a lot higher at 7.8% with repayments of £385 per month, so Its £50 extra per month and over the term of the loan an extra 5K to pay back in. interest. What can be done about this, I now feel I have no other option but to go for this because every time you apply for a loan Ive heard it affects your credit rating. Mine is good so dont want to damage it due to this trickery by the loan companies!

Nothing can be done about that offer - the headline rate is only applicable to 51% of successful applicants, if they offer you more, you didn't meet their criteria for that rate (hence showing the "good" rating is meaningless).

You can usually apply for 2 loans without to much of a problem but if you're not considered for prime loans then maybe try something a bit lower with a headline rate in the middle

DCFC79

Phil_Wolvin said:

with a credit score of 999 last time I checked this was certainly a shock...

That means nothing, your credit history is what matters, how you are currently and have managed money in the past basically.