Loans


(Lyn wilcox) #21

It would be nice if people who don’t have a great credit history but do have proof that they have been managing there account and paying money in should be given an option for smaller overdrafts or loans


(Ben ) #22

From what I’ve seen when playing with loans - it’s not that clear - the rate of APR changes depending on the length and cost. You get the total clarity of the cost overall, but the APR is harder to find.

I did a little comparison for every £100 what the APR is - top row for each £100 increment is the APR rate, bottom row is the advertised interest cost in £.

Amount Term
3 6 9 12
£200.00 18.70% 19.00% 19.00% 18.40%
£5.71 £10.24 £14.80 £18.78
£300.00 19.80% 19.40% 19.20% 19.40%
£9.00 £15.63 £22.37 £29.69
£400.00 19.80% 19.90% 19.70% 19.60%
£12.01 £21.37 £30.52 £39.98
£500.00 20.20% 20.00% 20.10% 20.00%
£15.30 £26.79 £38.99 £50.89
£600.00 20.10% 20.20% 20.00% 20.00%
£18.31 £32.50 £46.55 £61.21
£700.00 20.40% 20.20% 20.00% 20.30%
£21.60 £37.92 £54.40 £72.12
£800.00 20.30% 20.40% 20.20% 20.30%
£24.61 £43.65 £62.55 £82.41
£900.00 20.20% 20.30% 20.10% 20.30%
£27.59 £49.05 £70.12 £93.01
£1,000.00 20.60% 20.40% 20.50% 20.40%
£31.19 £54.78 £79.50 £103.61

TL;DR: The interest fluctuates between 18.4% to 20.6% - not sure if others see the same rates.


(Stuart) #23

Not at all competitive rates then or usefully large lending.


(Ben ) #24

To be fair there isn’t a huge amount of lenders in the sub £1000 arena from what I can see - and if the purpose is ‘spreading the cost of bigger purchases’ - then it seems to fit that bill.

Looking at other options for small loans/credit:

  • PayPal - £150 minimum, 4 months interest free, 17.9% APR outside the 4 month promotion.
  • QuikQuid (and similar) - typically about 300% APR

In fact, looking online for comparison sites, loans for £1000 over 12 months have an APR of between 13% - 19%. (ZOPA was the cheapest I saw, which came out at £90/m on £1000, vs £103 with Monzo)

The best option then if spreading the cost of a purchase is what this is for - is likely a 0% on Purchases credit card, if you can pass the credit check. I’ve seen typical ones offering 0% for 24-28 months, or as short as 6 months for ‘poorer credit scorers’.

All in all I don’t think there’s too much wrong with the Monzo rates - yes they are in the upper range - but certainly within the norm of loans for that value - and in fact better than other options for a short period of time.

(edit: removed a rogue word which changed the intended meaning of one sentence)


(Marcel Ruhf) #25

There is also Starling, we starts at 11%.


(Ben ) #26

Just googled their loan

I don’t have an overdraft with Starling, and it seems the overdraft and Loans are linked.

Any part of the overdraft not used can become a loan, and judging by the website the rate is a firm 11.5% regardless of term, loan value or anything else.

Which seems pretty decent from a transparency and an APR calculation/comparison point of view.

Edit: That said, I’ve just applied for a Starling overdraft and they’ve come back at £750 which is lower that I’d expect.


#27

Thanks for this. So if I take £200 out over a 12 month period I repay £218?

Is this a good loan? I won’t ever touch these as I don’t want to get myself in debt but just wondering.


(Stuart) #28

With utmost respect to anyone I think if someone needs a £200 loan then I would recommend not getting a loan because it sounds like they will be in a precarious position anyway. A loan will only make that worse.


#29

Yep! I wa me just wondering. As I mentioned on the above post I don’t play to ever touch loans or anything that could get me spireling in debt :slightly_smiling_face:

(I think I spelt that right)


(Ben ) #30

I would say it depends on the needs you have and the purpose of the loan.

£20 in interest doesn’t seem like a huge amount, and split over 12 months is something around £23 / mo, but if it does get used to “spread the cost of purchases” then it’s a really easy vicious cycle to fall into.

It may geneuinely be helpful to split the cost from time to time - emergencies or similar - but personally I’d rather be budgeting for things ahead of time.

Speaking from experience, once you get caught up in the credit game it can be hard to get back out.


#31

I was just wondering which would be the best price and have no plans to get a loan. Don’t have a stable income so it would be a stupid thing to do.


(Ben ) #32

Well, the price is a ‘good loan’ in the sense that there are not many lenders that will offer a £200 loan (from what I can tell).

It’s not so great in that there are cheaper credit tools to achieve a similar outcome. 0% Credit Cards or PayPal Credit would both be better in terms of total cost.


(Simon) #33

I see them more as an emergency over and overdraft.
For instance if your boiler broke you could probably afford to get it fixed for £50 a month over 6 months but not £300 straight away.


#34

Any word from Monzo when Loans will be rolled out to more customers? @cookywook


(Jack B) #35

Keen to know when the loans will be released to more people!


#36

If you swipe towards the right when on the account tab you may already be able to access loans


(Nathan Steer) #37

Just a note, that only works on IOS, we don’t have horizontal swiping on the account page in Android.

No idea how you can find out if you do have access to loans on Android though. Any Android users with loans access able to enlighten us? :smiley:


#38

From in app chat:

If we’ve turned it on for you and you’re eligible, you’ll see a loans Pot in your Account tab. On iOS, you’ll see this by swiping to the left on the Pots. On Android, it’s in the list of pots as ‘Loan’.

If you don’t see this, it means you’re currently not eligible for a loan or we haven’t turned on this feature for you yet. We’ll be rolling out loans to more customers very soon. Thanks for bearing with us in the meantime.


#39

This would be fairly useful for me now, unfortunately I’m not someone they’ve enabled it with.


#40

I have a personal loan from my old bank bank, which I used to buy my car. That was £15k with an APR of about 3%.

At some point i’ll want another one, but not at monzo’s rates…