Why we’re lending


#47

Just noticed I’ve been offered a loan.

I would have used Monzo loans if this had been around in May.

Washing machine broke, needed to buy one same day and delivered next day. Went with ao.com that allow anytime full repayment within 6mths and pay a fixed £29 for the convenience.

So £419 turns into £448.

Monzos £22.37 for the convenience and also not having to deal with V12 Retail Finance.


#48

With planned bigger loans I’d look at MSE for the best deals, currently:

£1-3k 6.9%
£3-5k 5%
£5-7.5k 3.4%
£7.5-15k 2.7%
£15-25k 2.8%

Would be ace if Monzo can do competitive large loans in future.


(Tony Hoyle) #49

You’ll often find the lower interest rates are backed up with large setup charges, and/or only available to people with impeccable credit ratings.

It’s not that monzo is particularly good, but I wouldn’t believe the ‘headline’ interest payments from anyone until I had a contract with it on.


(Valeri) #50

https://apple.news/A7Tae_lgMRi-23pCEkJXGcQ

Uh oh… comparing themselves with Wonga… so long ethical banking :see_no_evil:


Monzo in the media
(Is Santa here yet?) #51

There’s a difference between wanting to provide loans to customers who would previously only be able to get loans from Wonga, and holding Wonga as an example of how to do things :grin:


#52

Agreed. And I think I’m okay with the sentiment behind the article.

I’m interested in how much is the journalist’s take and how much was from Monzo. There’s a quote which reads like it’s from Tom at the beginning that explicitly mentions Wonga. In my view, it’d be best for Monzo to avoid the W word (which is still toxic and emotive) and talk about offering ethical, transparent, supportive alternatives to illegal lending.

That said, the article is confused and seems to imply that loans are 50p a day (“Monzo already offers an overdraft facility and recently began offering loans to its customers, for which it charges 50p per day”) so who knows what was actually said - or if Tom was just repeating Wonga after a journalist mentioned it.

Another interesting quote:

Lending money is a “tricky subject” inside the start-up. “There are some members of our staff who just believe it’s evil, just believe it shouldn’t be done at all,” Mr Blomfield said.


#53

I can understand where @tom coming from but as Peter said any reference to Wonga would not sit well with a lot of people

Quote from the newspaper article;

“If you’ve got a doorstep lender who literally is going to come round with a baseball bat, actually Wonga looks like a pretty attractive alternative,” he said.


(Tristan Thomas) #54

Tom (and the rest of Monzo) feels strongly that the high-cost loan market is currently terrible, with predatory companies taking advantage of individuals in dire circumstances. Wonga, especially early on, was one of those (although probably still better than a neighbourhood loan shark).

However, there’s a bit too much media interpretation in this article — at one point, they wanted to write that we were about to launch a Wonga competitor. All of this from Tom expressing his disgust with the way the market is currently setup, which I think most people here would agree with.

We don’t have any plans in this space, but we do want to continue talking about it; with customers, individuals affected and the media. I think we have a moral obligation to do so and to try and improve the existing situation as much as possible using our voice.


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#56

Thanks for the insight, @tristan. Super reassuring and exactly where I’d hoped you be.

Keep up the good work! :+1: :monzopride:


(tom) #57

Totally agree with @tristan’s comments.

Mainstream banks don’t talk about people with poor credit history or problem debt because the press immediately start screaming “Wonga” and “Payday lender”. And so not enough people are working to address it. That makes me incredibly angry and I’m fed up of avoiding the issued because of the risk of negative headlines.

We are going to work really, really hard to try to help people with poor credit scores and problem debt. We want to be part of the solution, not pretend it’s an issue that doesn’t exist. We might not get it right all the time, but we’ll work with our customers and improve. And we’d love your help getting there :heart:


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Credit line
(Valeri) #58

If nothing else, that does sound reassuring. :mondo: :heart: :monzopride:


(Nathan) #60

Can someone explain the apr being offered here? Are they different from customer to customer?

Also think it should be easier to find but the loan terms view itself is actually really nice.

Personally the terms are too high for me to consider but a nice option all the same.


#61

@tristan Is it also possible to explain what the loan offered is based on? Is it credit file or just Monzo looking at spending patterns etc.

Is there a list of factors that can improve the amount offered? - If I had my salary/savings with Monzo, rather than just using it for monthly spend, does the lending amount change? Does the time you’ve held your Monzo account change it? etc


(Ray) #62

I am also wondering same thing as Monzo is offering to charge me twice the interest my legacy bank offers.


#63

Without putting words in their mouth, my understanding is that they are not aiming to be top ranked on price. They are aiming to be the most transparent and convenient product.

With my legacy bank I get a free overdraft limit and a relatively cheap APR after that. However, I’m fully aware that their organisation steals from the poor to pay the rich by charging predatory fees to enable free overdrafts and huge switching bribes.

They also borrowed billions from the tax payer to avoid the end of civilisation, contributed to the sub-prime mortgage crisis, rigged the world’s LIBOR rate in their favour, promoted and supported money laundering for drug gangs in South America and more directly they have terrible technology, customer service and are generally an organisation that is rotten to the core.

If price is the overriding factor in your decision making process, then legacy banks or Starling Bank are definitely the places to be. Or you can just be multi-banked like most people these days, to get the best of all worlds. :grin:


#64

I really do not get overdrafts.

I have had bank accounts for almost 40 years, never had an overdraft and never allowed myself to spend what I have not got.

Are overdrafts seen by people as generally a good thing, or a bad one?

I have seen people live in their overdraft and never try to clear it, just continue to spend on impulse.

I am not saying that everyone in an overdraft buys on impulse. For some they seem to be important.

Just wondered what general opinion is?


#65

Yeah, I’ve only ever gone into mine once or twice I think. The result of what I would consider unforseen emergency purchases. That’s how I see an overdraft: a short term emergency loan.

I believe some people use it to extend cost of living for the month and that’s fine but potentially risky.

Whereas, yeah, I know plenty of people who essentially live in one. Some attempt to get out of it by reducing costs they can go without and others don’t seem to care.


((╯°□°)╯︵ ┻━┻) #67

Haha I asked the exact same question as you in another topic and it got into a very lengthy debate. Following your question I stated that if people were continually going into their overdraft then they were living beyond their means and that they needed to cut back on something. Be this a subscription, reducing their TV package, catching the bus instead of having a car and so on.

It then moved onto the discussion of what people deem as “essential” vs “luxuries” which had some surprising results. If I can find the topic later I’ll link to it :smile:


#68

Oops. Me bad :joy::rofl:


(Natalia) #69

Are we not worried that Monzo are exploring the Wonga loan platform…??? I am pretty sure that they will end up in administration as well, in that case. To give loan to people with bad credit ratings and who can’t afford to repay it just sounds wrong… and unethical. Ohh, I just have a bad feeling about this :frowning:


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