Personal loan rate

[mellongoose]

I've been looking at borrowing between £7.5k and £8k. Advertised interest rates are between 2 and 3.5%. I've gone through the application process online with two banks.

Both applications have been accepted but one is offering 9% and the other 12%. Why might this be?

Thanks

Your credit rating and financial history will play a part I would think.

They only have to offer a certain number of loans at the low rate to advertise it at this rate. The rest will always be higher.

The rates advertised are provisional. The actual rate could be higher or lower depending on your credit rating.

My first thought was credit rating but my rating is good (according to my bank). This is why I'm a bit

Rather than rely on your bank to tell you that you credit rating is good, try registering with the credit reference agencies and having a look for yourself. Noddle and Clearscore are both free and I'm sure there's another free one although the name escapes me at the moment.

Looking at your credit report might not show anything glaringly obvious. Potential lenders will have some sort of algorithm which decides who gets the best rates, and quite simply the computer says no.
It doesn't mean your credit worthiness is bad, so to speak it's just not quite shiny enough to be offered their best rate.

In all honesty, (and I'm not saying this to be rude or unhelpful - I often ask for advice on here that I could possibly get elsewhere), but in this case, I really do think the only way you will find out, is to ask the bank themselves.

They won't say. In fact they won't even know. No point in wasting time even asking.

I'll pop in and see them anyway. I thought MNers might be helpful in meantime... which you have been, so thank you 👍

I don't like being ripped off so will try another way or do without!

What on earth makes you think you're being ripped off?

What on earth makes you think you're being ripped off?

Maybe it was the fact they advertised their loan rate as being between 2 and 3.5%, then processed application and said they will charge 9% or 12% ?

Sigh........

Where do they say every customer will get that rate? That's right, they don't.

In fact they clearly state this. They give this rate to the top 51% of applicants (the same with any lenders advertising certain rates) you're not one of them. You're not being ripped off, it's the way the industry works.

Next time read the small print.

You can sigh all you want lottie, but a large % of the population are not particularly financially savvy.
Very few people trawl through the small print of anything (and those that do, a lot don't understand it). Yes, I agree no-one should sign a contract without reading the small print, but I can see that if someone were thinking of applying for their first loan, it is not unreasonable to expect the advertising to be open / honest / clear enough to indicate they won't be offering what they appear to be offering, to many people. At the stage of applying, it should have been made very clear, and apparently it wasn't.
Before doing anything new, none of us have the life experience to know what we "should" be asking. We tend to assume big institutions might be honest, until we learn otherwise over time.

Back I'm not denying that, but you most certainly haven't been "ripped off" and to claim that you have been is just silly.

All the rates say "representative" next to them, it's made perfectly clear! There are rules in place to make sure they're clear! But you choose to ignore certain bits of the advert and then claim you've been ripped off.

I've scanned over loan pages for major banks offering loans and they all CLEARLY state...... "rates FROM x%" and/ or "lending and rates subjust to status".

Noddle and Clearscore are both free and I'm sure there's another free one although the name escapes me at the moment.

Experian is also (partially) free.

Lottie you're quite right. I haven't been ripped off because I haven't signed anything.

I do read the small print. My question to those in the know is who they give the advertised rate to?

But even if you did sign something, you still wouldn't have been ripped off?

Re the acceptance criteria for the lowest rate......No one knows. It's a complicated algorithim developed by their boffins and computer systems. Even if you go into the branch, they won't be able to tell you.

All they can tell you is, as a minimum, the best 51% of applicants get it.

They offer loans at cheaper % rates, it doesn't necessarily mean you will get the cheaper rate - that depends on your personal situation. But some people will, this can happen even with your own bank. It's the same with things like up to 36 months 0% interest free balance transfer on credit cards, but when you apply you only get 20 months, or on a holiday such a place from £250pp yet whatever date you search is always more..... as long as they do give a certain % at the advertised rate they're doing nothing wrong, but it can be annoying.