Warning - Creation finance

smirnofffff · 17 June 2019 at 1:13AM

I applied for a creation finance loan to consolidate my debts as they sent me an offer for 7.9% loan.

I got the paperwork today and on a closer look its 20.9% apr and with added fees etc for a £10,000 loan over 48 months they would charge me £14,385.
That's nearly 50% on top of what i would be borrowing... Surely its not legal for them to try and dupe people into such things is it?

fiestaman87 · 17 June 2019 at 5:23AM

Did you check the T&Cs when you applied? Did it say from 7.9%?

It is just possible that you may not have been accepted for the advertised rate and been given a higher rate.

If you do not want this deal you should have a cooling off period - again check the T&Cs.

I hope this helps.

Dobbibill · 17 June 2019 at 6:10AM

Possibly says 'from' - as stated above.

Rather than borrow your way out of debt why don't you pop over to the DFW board and post a SOA.

The good forum members may be able to offer alternative solutions, hints and tips that doesn't involve consolidation - which rarely works.

Kentish_Dave · 17 June 2019 at 7:10AM

They really are not trying to dupe you, they make it very clear that the headline rate is representative and that the rate which you will get depends on your personal circumstances.

fatbelly · 17 June 2019 at 7:19AM

I think the headline rate has to be offered to 50% of applicants.

With a load of debt already, you were unlikely to be in that 50%

foxy-stoat · 17 June 2019 at 9:12AM

smirnofffff wrote: »

I applied for a creation finance loan to consolidate my debts as they sent me an offer for 7.9% loan.

I got the paperwork today and on a closer look its 20.9% apr and with added fees etc for a £10,000 loan over 48 months they would charge me £14,385.
That's nearly 50% on top of what i would be borrowing... Surely its not legal for them to try and dupe people into such things is it?

You really should rename your title to "warning already read the agreement before signing".

Hats off for doing just that, so many people don't then wonder why 6 months in they work out how much the interest rate is, or reading the agreement.

Nothing illegal has happened here.

MEM62 · 17 June 2019 at 10:31AM

smirnofffff wrote: »

I applied for a creation finance loan to consolidate my debts as they sent me an offer for 7.9% loan.

I got the paperwork today and on a closer look its 20.9% apr and with added fees etc for a £10,000 loan over 48 months they would charge me £14,385.
That's nearly 50% on top of what i would be borrowing... Surely its not legal for them to try and dupe people into such things is it?

Not sure why you feel that this is an attempt to dupe you. The rate is shown on the paperwork in a manner that is clear enough for you to have seen it. Most loan adverts show the 'headline' rate and it is noted in the application that the rate you get will depend in your circumstances.

In more general terms, if you are getting offered loans at 20% interest rates you need to accept the message that it is time for you to stop borrowing money. Consolidation loans do not work - you cannot borrow your way out of debt.

You'll need an alternative strategy of dealing with your debts. The DFW board will have lots of advice available if you post an SOA.

DCFC79 · 17 June 2019 at 11:34AM

smirnofffff wrote: »

I applied for a creation finance loan to consolidate my debts as they sent me an offer for 7.9% loan.

I got the paperwork today and on a closer look its 20.9% apr and with added fees etc for a £10,000 loan over 48 months they would charge me £14,385.
That's nearly 50% on top of what i would be borrowing... Surely its not legal for them to try and dupe people into such things is it?

Its perfectly fine, as mentioned it should say "from" in the t&c's. No 1 is being duped, you apply and they offer you a loan at x amount and the customer has the choice to take up the offer or go elsewhere so no duping is going on here.

Duped is where you would apply for a loan and get offered the amount and told its at 5% and you later find out its actually 14.9%, now that's actually being duped.

You do know consolidation is a risky move ?

What reason did you say the loan was for ?

If you said consolidation then maybe that's why the rate was upped.
Have you asked them why it was increased ?

foxy-stoat · 17 June 2019 at 4:35PM

I get the same pre-approved letter from Creation every month, ever since I bought a sofa on interest free credit.

Its a guaranteed pre-approved rate of 7.9%* blah blah blah.

* Subject to status and credit check.

[Deleted User] · 18 June 2019 at 2:30PM

foxy-stoat wrote: »

I get the same pre-approved letter from Creation every month, ever since I bought a sofa on interest free credit.

Its a guaranteed pre-approved rate of 7.9%* blah blah blah.

Bold bits - That's incredibly unfair and misleading, that must be borderline in terms of TCF compliance!? Especially considering the repetitive nature of the 'offer'.

Good job the OP actually read the terms, I know many people are just so glad to be approved for what they asked for, they sign and return (or e-sign) without even checking properly!

foxy-stoat · 19 June 2019 at 9:09AM

Somerset_La_La_La wrote: »

Bold bits - That's incredibly unfair and misleading, that must be borderline in terms of TCF compliance!? Especially considering the repetitive nature of the 'offer'.

Good job the OP actually read the terms, I know many people are just so glad to be approved for what they asked for, they sign and return (or e-sign) without even checking properly!

I know, I just bin the letters I get. I also know that no loan is pre-approved without a credit check, unless the interest rate is 50%.

Warning - Creation finance

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