Misleading Interest Rate Quotes

sorrysight

After hovering around looking for a loan and seeing nothing below the 12%-15% mark for a while, a couple 5.8% loans appeared on this site and we went for it. 

We were approved, but with an interest rate of 13%. 

I understand that to be able to advertise at a certain rate, very few customers actually need to be offered it. But it should be a legal requirement to show which rates customers actually get and in which proportions. If 90% of people get offered something that is over double the advertised rate, that should have to be declared. 

In my mind, this practice is quite predatory. Once you've had the hard search added, it could potentially harm your score and affect your chances of getting a rate lower somewhere else. 

molerat

I believe 51% need to be offered the headlined rate.  If you have had trouble finding a loan at a reasonable rate previously it seems fair to assume that you would be one of the other 49% unlikely to get that headlined rate.

Hoenir

sorrysight said:

 But it should be a legal requirement to show which rates customers actually get and in which proportions. 

Wouldn't actually make the mud any clearer. There's a whole host of factors involved from the amount borrowed, to the term, to the credit worthiness of the borrower. Likewise the lender will have a risk appetite in the way they build their lending books. Not like selling baked beans were they stack them high and sell as many as they can. Money is finite. 

DullGreyGuy

sorrysight said:

After hovering around looking for a loan and seeing nothing below the 12%-15% mark for a while, a couple 5.8% loans appeared on this site and we went for it. 

We were approved, but with an interest rate of 13%. 

I understand that to be able to advertise at a certain rate, very few customers actually need to be offered it. But it should be a legal requirement to show which rates customers actually get and in which proportions. If 90% of people get offered something that is over double the advertised rate, that should have to be declared. 

In my mind, this practice is quite predatory. Once you've had the hard search added, it could potentially harm your score and affect your chances of getting a rate lower somewhere else. 

The majority of the people approved have to be given the illustrative rate (or better) so in other words 50.1% can be offered 5.8% or better and the other 49.9% can be offered something much worse. Those that are simply declined dont count. 

So 90% can't be offered double the rate, only 49.9% can

sorrysight

molerat said:

I believe 51% need to be offered the headlined rate.  If you have had trouble finding a loan at a reasonable rate previously it seems fair to assume that you would be one of the other 49% unlikely to get that headlined rate.

Not had any trouble historically getting a lower rate. I guess I do now, though. Surprising when my indicators across 3 different scorers are all in the green. 

Hoenir

sorrysight said:

molerat said:

I believe 51% need to be offered the headlined rate.  If you have had trouble finding a loan at a reasonable rate previously it seems fair to assume that you would be one of the other 49% unlikely to get that headlined rate.

Not had any trouble historically getting a lower rate. I guess I do now, though. Surprising when my indicators across 3 different scorers are all in the green. 

Unlikely to be anything personal. Lenders work top down taking a macro view.