Super interesting then. I’m really curious as to their eligibility criteria for these loans.
I’m surprised I’m getting a max of £3k when I have a decent credit score.
From what they have said (its mostly a trade secret I think) its based not just on credit history but also on your usage trends in Monzo. So depending on how you use your Monzo account the amount they are offering will change.
Also credit score is a bit of a shit representation, instead they would look at history, which is a different kettle of fish.
Overall I think they’re very conservative in there lending.
Take £7,500 and you should get a cheaper rate and pay £500 back straight away
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This is a very strange execution that I don’t think is in keeping with Monzo’s brand however much they claim it fits within their values.
Everyone’s rates are tailored according to income by the looks of it, I was offered 6.9% APR (unlike the poster above) on £7k, double the cost of a loan for the same amount I am pre-approved for on Clearscore with Zopa.
However, there was nothing around affordability, nothing about maximum debt ratios or anything else to help people make informed application decisions.
I also find it worrying that you are giving an APR before a soft search, so have to be using salary and postcode information instead?
As a baseline, I believe Monzo should offer services that are at least near parity with the comparison sites. This journey creates a far greater chance of consumer detriment, is far more expensive than the best loans available in the market and provides far less useful information than almost any other loan journey I can think of.
On the plus side, at least there aren’t early repayment charges.
Richard
Weirdly the rates emailed to me and the ones through the app are now different.
Email: 3.7% £7.5K-£15k
App: 6.1% £7.5K-£15k
My app percentages have gone up since i last checked (about 2 weeks ago)
- I’d love to know whats changed in the last fortnight that monzo knows about my situation that i dont
- Surely there should be a disclaimer in the mail to state these rates may not be correct for me?
If monzo are basing my loan creditability off of things like summary and budgets I think this is something id like to know as Id remove budgets altogeher if thats the case.
What makes you think that?
I was offered 12.9% on under £7,500, 3.7% over and the best I could get elsewhere was 20.9% so I don’t think your post is accurate
Hey folks 
Jack here – I’m a Product Marketer here at Monzo and have recently started working on lending products! (some of you may have seen me around on business banking and main account threads before 
)
Just a quick note on rates – whenever we talk about our loans in a promotional context, we have to talk about our “representative” APR, which is what 51%+ of customers will see as their rate.
Everywhere else, we show you your personal rate. So, if you’re using the loans calculator in the app, you’ll only ever see the rate you can get. We do this because one of the main things people find confusing about loans from other lenders is that they’ll advertise a “best possible” rate, then when you actually apply, you’ll get a different version (which often doesn’t feel very nice, or representative of what’s advertised to you in the first place 
).
We’ll only show your rate, and where we have to, show the representative APR (which could be different).
I hope this helps! Here if you have any questions 
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Thanks for clarifying that Jack.
As I’ve mentioned above my rates have worsened in the last 2 weeks while not wanting a loan at the moment I’d love to know why monzo suddenly has changed my rate.
If i were to contact chat would I be given a reasoning on this or will it be a case of “we cant tell you the logic behind our lending criteria” ?
Or even worse will i be passed from specialist to specialist 
My rationale is if im thinking about this others may well be too and raise this via in app chat(clogging up chat queues).
Are there still plans to improve the loans section with the Monzo loan score and with details of Monzos assumptions about you so you can check its correct.
Are you able to say how heavily your credit report with TransUnion affects your limit/rates vs the other factors like income/owning property/employment that are asked for in app and vs other factors like how often you use Monzo and incoming/outgoing payments.
I have a feeling that Monzo aren’t really too concerned about credit report unless you have defaults/CCJs/missed payments.
I also think Monzo aren’t taking income really into account as people with £100+ salarys with decent credit report haven’t been offered a loan or a crap limit/APR.
So that really leaves a heavy weight on Monzo activity in determining limit/APR ?
I find the concept of tiered rates on a loan product which also features unlimited, free overpayments to be the antithesis of transparent.
To use @Rat_au_van’s rates as an example, you could find yourself borrowing £7,000 at 12.9%, when in order to only pay 3.7% you’d simply need to borrow £7,500 and repay £500 straight back.
If Monzo allows overpayments like this, it stands to reason that it is not being transparent to some borrowers who may be unfamiliar with borrowing and APRs, and who may inadvertently request a lower amount.
If Monzo will allow me to borrow £500 at 3.7% simply because I understand how to play it at its own game, then it should really have a flat rate for all loans.
5 Likes
They aren’t doing a soft search upfront and yet the APRs are individual, I get the same rates as you, but they are different to one of the posters above.
You have been offered a rate - without much information, but given how far out of sync your result is with the rest of the market, if you apply their has chances are you may not be approved.
My fundamental concern is that Monzo have not implemented an upfront soft search. This means Monzo are offering loan APRs on proxy information such as postcode, spending on their Monzo cards and possibly postcode.
This means that a large portion of your account holders will be meaningfully mispriced - rejected if the APR is too low and they’ll never take a loan if it is too high.
I would have expected that you would do a soft search and as the lender you would then:
Would the customer be accepted
What the maximum amount they could borrow
What would be their max monthly repayment
Then using the information on the file give a brief explanation of why the results showed as they did.
This would allow increased user education, increase the likelihood of acceptance and and it would have differentiated Monzo from any other lender.
I am sorry to say the current offering is really disappointing, I am sure Monzo will be able to check whether my concerns are valid from the loan enquiry >> application>> accept rate.
In addition Monzo will probably be able to do some retrospectives with the bureau on shadow scorecards to see what percentage of their accepted applicants would have got better or worse rates elsewhere.
I did exactly this - I needed 3.5k to pay off an existing loan at a higher rate, so I borrowed 7k and immediately paid back half… now I’ve got a 3.5k loan at 3.7% 
2 Likes
same. Needed £6000 to pay off a loan so took £7,500 and paid back £1500 the next day
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I was initially eligible for £15,000 and then it went down to £3,000 after a few weeks and now seems to have stabilized at £7,000.
I spoke to one of the team at Monzo about the eligibility criteria and (at least in my circumstance), they had a pretty accurate picture of my earnings and spending’s each month which gave them an amount that I was left with per month - this seemed to weigh pretty heavily on eligibility.
However, it didn’t take into account that 60%+ of my income is currently disposable and that I put X amount into savings outside of Monzo.
Here is in the conversation, with the obvious personal information redacted:
I hope this helps shine some light!
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Is this how it works? My understanding was as below:
Need £5000 Loan:
-
Take £5000 loan over 60 months at 9.3% and pay in total: £6219.41
-
Take £7500 loan over 60 months at 6.1% and pay in total: £8692.05
Even with case 2 repayment of £2500 straight away you’re left with repaying £6192.05
Making a saving of in this case of around £28?
Or am i missing something? 
It really just looks like they are counting any money that you don’t keep with Monzo as “spending” - when in reality you (and I) are sending money elsewhere for saving.
2 Likes
Odd that, I send ~40% of my income into other accounts, but am still eligible for a £15,000 loan.
I make
£5k loan over 5 years @9.3 is £6,216.69 = loan costs £1,216.69
£5k loan over 5 years @6.1 is £5,790.89 = loan costs £790.89
So if you plan on keeping that loan for the full 5 years.
£1,216.69 - £790.89 = £425.80 saving by taking out £7.5k and immediately paying back £2.5k
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I think this is the reason why so many people are confused why Monzo won’t give them a loan or at a very crappy rate compared to elsewhere.
Decent credit report, no missed payments, no defaults, no CCJs. 
Decent/ok salary
Don’t keep savings with Monzo, or have your salary paid into a different account and transfer a bit to Monzo for monthly spending 
Before recently switching to Amex I used to transfer £2k for monthly spend (not used for any bills/savings etc). That would reach near £0 and be topped up again the following month.
If Monzo are basing it heavily on this then I probably look reckless to them.
Now I keep only the bare minimum to cover non-amex/atm so it’ll be interesting if thats affects it next month, although I’m not sure how worse it can get with almost 30% APR.
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So does this mean the “interest to pay” is recalculated on a daily basis.
I thought it was more a case you’ve agreed to pay a set amount (in your case £6,216.69)
So all you’d be doing is paying off the agreed amount sooner and reducing your monthly payments?
Would be very happy if this isnt the case, its for the way you mentioned it is the reason why I usually take all personal loans from my credit union so that I can repay more off it when I want and reduce the overall interest id need to pay.