Loans (old thread)

Flat rates means everyone is charged the same which is much better than penalising people who have less cash available or have poorer credit ratings (sometimes as a result of ending up in debt because of high interest loans!)

That is definitely the best approach in my book, everyone should be on an equal (as much as possible) footing.

Plus, this is far simpler to administer too

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It also means they can test the overall process without having to also program an interest rate calculator.

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Well I see your point but I’m not willing to pay a 15% when other banks offer me a lower interest.

That’s the beauty of the market - take your business elsewhere!

Do we know for certain it’s a fixed rate for everyone?

For the trial yes but haven’t seen anything about when it goes on full release

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There’s a surprise :joy:

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Are you talking about a short term loan or a long term loan? Most banks only offer loans from 12 months +

Loans below this would be consider short term and are usually at high rates of interest because the company doesn’t have the opportunity to make any profit. As we have seen, Wonga found it increasingly more difficult when the rates were capped at 1500% equivalent to 0.8% a day

So 15% for a short term loan is actually very very attractive (and for comparative purposes only, Starling is 11.5% isn’t it for similar kinds of short term loans?)

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From I think

Morning all :wave: !

It’s been a busy few weeks iterating on the early feedback here! Thanks so much to everyone that’s been testing.

I’ll try answer a few more questions :blush:

Yep that’s right, your loan limit is in addition to your overdraft limit. It’s worth noting that when we initially roll this out the limits will vary between £250 and £1,000 similar to overdrafts. It won’t be a flat £1,000 for everyone.

Good question! You save on the future interest. As soon as you pay back you’ll stop paying interest on that money. ‘Early settlement quotes’ sound confusing :exploding_head: . We’d like to make it really clear what it means for your schedule and payment amounts every time you pay back, all from within the app.

We’ve looked at other products on the market and chosen to keep our offer super simple to start with. As we learn more about the different use cases we’ll think about iterating on this.

Glad to hear it’s easy to understand! Vuokko and Simon - our designers - are working hard to distil the loan down into something clear and simple. Please let us know if you spot things that could be improved.

We currently let the credit reference agency know when you’ve taken out a loan, in the same way to overdrafts. As far as I’m aware, on the whole it shouldn’t damage your score as long as you’re repaying in full and on time. However, there might be exceptions - particularly in the way other companies interpret the loan in your credit history. I’m not 100% sure on that front.

These are bril points of feedback. We have plans for all of them! Here’s some more thoughts:

  • We’ll be working on the story ‘I want to understand whether it’s best to use my overdraft or the loan’.
  • We’re currently planning a mechanism to tie more neatly into a transaction. We chose to build the loan in the account screen first as lots of people won’t have the money up front to even make the transaction in the first place though.
  • We agree with setting a repayment date, the v1 will be ‘what day of the month do you want to repay’ rather than letting you set each repayment day individually
  • We’ve already got longer term lengths out on Android! iOS should land on Monday (is in Testflight but feature flagged).

This is a cool idea @theshillito, would love to hear a bit more about how you think this might work?

Coincidentally we’ve lost our iOS engineer Alex to work on app performance this week :sunglasses: .

This was for simplicity at the start. We’ll look to improve this as a) we learn more about who uses the loans and how and why, and b) we change the amounts and lengths.


Thanks again for all the feedback! Let me know if you have any other questions.

Otherwise, happy weekend :palm_tree:

Rich

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Quick question – will there be a minimum loan amount?

Yep - it’s currently £200.

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Honestly, I’m coming at this from credit card territory, but it would literally work as a pay day loan. I’ll try and demonstrate this as best I can:

Here’s an example situation:
Current Date: 4th September
Pay Day: 23rd September (so I don’t have to spend too long editing screenshots lol)
Current balance: £165

There have been some announcements for the Hyper Japan festival in London, so I need to book a hotel before they go up in price and/or get booked up. I find a decent deal for a hotel, but I don’t have enough money. What I would do is put it on my credit card and then pay it off next month after I get paid. If I didn’t have a credit card, I’d put it on my Monzo account and I’d go overdrawn (or it’d get rejected). What I’d like to do is just put the transaction to one side to be paid on the 23rd when I get paid. Something like this:


Wording and amounts are completely made up, and I don’t think I’ve got the fonts right lol, but that’s basically it. Could then add additional transactions to it (like the event tickets and the train tickets, etc). As I said, I think it’s a bit too similar to a credit card, but it would work like a combined debit and credit account. Could give the transactions an orange figure like the overdraft item already does ^^

EDIT: Just to clarify, the model I’ve used above is for a credit card style “no interest until after a month”, and there’d probably have to be a minimum payment of some sorts with it as well. Alternatively, you could have some interest immediately after a month, but I personally wouldn’t use that as I’d just use overdraft or my actual credit card.

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Pssst, pretty sure they just use the system fonts (San Francisco on iOS, Roboto on Android(?))

Not that I would wander off topic to blather on about fonts, like.

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This could even work on those “Declined, you didn’t have £x” feed items (and then try the transaction again).

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I used Segoe UI as it’s quite similar in some ways, but not others. I miss Windows Phone :laughing:

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I like this idea a lot :slight_smile:

At the moment I put big purchases on my 0% credit card and 9 times out of 10 pay it off the next payday… this would mean Monzo has better understanding of my payments as its all in one place :slight_smile:

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Late to the game, but finally used this today. Nice easy to understand flow of what’s due to be repaid and when :smile: far too handy for an impulse purchase though :stuck_out_tongue_winking_eye:

image

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Just got loans activated on my account today as well.

Me too. Looks an easy and clear process to go through

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Where do you see this option?