Many consumers are hooked by the low interest rate but it is only when they approach the lenders that they really know they don’t qualify for best interest rate or cheap loan. Similarly, many unsuccessful applicants are either rejected on the spot or offered loan at a higher rate. Others are amazed to learn that they have to borrow more in order to qualify for the best rate. But what’s annoying is that money lenders often shy away from stating the reason why the attractive rate was declined.
Even after the Office of Fair Trading introduced customer-friendly reform last year that makes it mandatory for lenders to offer at least 66 per cent (up from 51 per cent) of all applicants their most attractive rates, but still they are shying away from disclosing the exact reason why applicants are rejected.
For instance, Alliance & Leicester best rate of 5.9 per cent annual premium rate (APR) is on offer for only those customers who are willing to borrow between £5,000 and £15,000. The bank said they are not in the position to give out the reason as to why the costumers’ loan has been rejected, but they were making sure that the customer was informed beforehand that they would be credit scored using a points-based system. Also, the bank does not stop once it has reached 66 per cent threshold; if the applicants meet all the required criteria, the bank offers them the loan.
Royal Bank of Scotland (RBS) said in the beginning itself they explain that their loans are based purely on personal circumstances. The bank would not reveal any details about why they were declined, but if case demands, the bank would refer them back to that initial conversation. RBS said they monitor its thresholds on a day-to-day basis and makes sure that it lends beyond the 66 per cent limit.
Northern Rock meanwhile offers the lowest of best rate of 5.7 per cent APR on amounts as low as £1,000 up to £25,000, to customers (aged between 21 and 80) who are willing to meet its lending criteria.
Moira Haynes at Citizens Advice said the people should very well know why they have been shown the door. It is important to have more clarity from lenders that directly relates to individuals. Nonetheless, one thing consumers can do is check their credit files, especially if they have been rejected on more than one occasion.
Posted
on : Sat, 12 Mar 2005 00:00 GMT | Loans News
By : Rob Davis
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