Interested to know your views on mortgages. Is that surely not the very definition of borrowing money to afford something you could not otherwise? But that is not something even the Debt Free Wannabes board over on MSE would consider bad debt
2 Likes
Mortgages are just loans after all
Yeah, same for the mortgages. I am happy to rent for the time being. I just can’t bear the thought that a bank, which already has billions, would make even more money by charging me interest. I also don’t want to be tied up to something for 25 years.
I know that millions of people live like this and that’s fine, that’s the system that was built up for us. I’ll try to steer clear for as long as I can 
3 Likes
Okay, you get thumbs up for consistency of viewpoint at least
2 Likes
1 Like
I’m fine with interest, you’re technically paying for a service just like when you buy a cup of coffee. As mentioned, nobody forces you to take out loans.
It would be foolish for a bank to take all the risk and lend money for free. They’d go bankrupt in no time.
2 Likes
Of course, I get that:) I just choose not to give them any of my money, that’s it
1 Like
They still pay you and charge you money.
Investopedia explains it quite well
4 Likes
If your business fails they then try and reclaim the money through asset selling, if that fails they will get a court order to put you in prison(This heavily depends on the jurisdiction of the country you are operating in!).
I agree that this only works if you are doing well, I would assume this is why in an ideal world they would try and lend to businesses with good profits etc.
2 Likes
Did I miss a memo on this? Does it get offered for every purchase above a certain amount?
Does it also show in the main feed? Or only when you tap into the purchase?
If you’ve been preassessed for a loan then it’ll show up to the left of the debit card in the accounts screen. Think it’s still rolling out though but the overdraft is a good indicator as to wether you’ll be offered the loan or not
Yeah, I’ve had the loan option there for a while (on the sole account).
It was more the prompt to take out a loan after a purchase - Is there a minimum spend that prompts this (and is there a way to turn it off?)
Edit - What’s with the “system” that keeps editing posts to remove the quoted content?
Turning off lending promotions on settings seems to turn off the messaging prompts. I assume there’s a min amount but no idea what it is!
Discourse now auto removes quotes where the post directly follows the quoted post
1 Like
Good to know (on both accounts!)
I’m relatively indifferent to the “lending promo messages” that first Starling, and now Monzo have adopted (the Starling forum was very against them).
The only thing I find a little odd is that someone would decide to buy something on their DEBIT card (not credit), and then convert to a loan after the fact… I mean, if you can afford to buy it on your debit card, why would you then want to spread it over X amount of months and pay the interest?
I can certainly see why a lot of people considered it irresponsible marketing/lending.
I’m sure there will be a few cases where an unexpected financial situation arises, and someone will need to convert a recent large purchase into a loan - But I’d guess that those situations are thin on the ground!
3 Likes
I guess the clue’s in the name - you’re spreading the cost, rather than taking a ‘big hit’ to your finances up front. But a) the rate will be different than a credit card’s & b) you’re committing to paying off the debt, rather than potentially digging yourself into a hole long term. Lastly, not everyone has access to a credit card.
Why?
I don’t think that, that’s the use case that these loans are designed for at all tbh.
1 Like
If you wanted to do that, why wouldn’t you sort out the loan prior to the purchase?
Perhaps the functionality was unknown to the user, but the wording, and general concept feels very reactionary, rather than proactive.
You are also committing to paying off more than you would if you simply bought it outright - The fact you can buy it outright in the first instances should mean that you can afford whatever it is.
If you can’t afford it, and need to spread the payments, there are much better rates for an organised loan, rather than having to convert your recent purchase into a loan through Monzo.
Why do some people consider it irresponsible? Because you are encouraging someone to pay interest on a purchase that has already been made in full - If that person can’t afford the purchase in the first place, should they have purchased it in the first place?
If it’s planned, you have loans designed for these kind of things (house repairs etc), which offer better rates.
If it’s unplanned, and a last minute emergency, I can see a potential use case here - Although I’d still be concerned that the person would have to take a loan out for whatever the last minute emergency is - Unless they are very good with their finances, it’s a slippery slope to go down.
Like I said, just because I can’t think of a use case (or can’t think of many), it doesn’t mean they won’t exist - Especially in the hypothetical world of the internet 
What examples can you think of where this would be the best way to go?
I’ll add - I’m merely repeating previous concerns that have been raised - I don’t subscribe to the “nanny state” of making sure no one makes any mistakes ever - People are free to do as they please.
I just personally don’t understand why someone would want to “spread the cost” of something they have bought outright on a debit card, when there are seemingly much better options out there (pre determined loan at a significantly lower interest rate, or credit card spring to mind).
If this hypothetical person can’t get the loan or credit card, chances are Monzo (with their strict lending criteria), are not going to offer the loan anyway.
If Monzo do offer the loan, then is it designed for people who can’t get a decent credit card or loan? Is it catering for those with worse credit records (something I know Tom is keen to “disrupt”)?
If so, fair enough - As long as the option to turn off the wording on the notification exists, I couldn’t care less 
2 Likes
Because it’s more convenient to do it this way &/or you decide that you’d rather spread the cost, instead of taking the hit up front etc?
I don’t think you need to worry about people being capable of making a decision about whether those interest payments are a good idea of not. Monzo explains the payment schedule clearly & enables users to manage it easily.
This is literally one of the main use cases for credit.
Discussing this seems like a bit of a waste of time then.
No it’s not.
1 Like
I just think this screams of bad financial planning, or little to no other option - Neither are great scenarios to be in, and whilst it may not be anyone’s fault, there is no getting around that the Monzo option is more expensive (and for people in a tight spot, might not be the best option).
Explaining something clearly does not mean it’s the best thing for the customer (see overdraft fees for reference - Appreciate different customers prefer different things).
Main uses for pre approved credit (through a credit card or loan) - Not an afterthought.
Considering you haven’t actually given examples of how you see it working, and just seem intent on disagreeing with me, I’d agree with you
Care to elaborate? Who is it designed for then?
Oh, and again - If you can think of any actual examples where this would be the best solution - I’d love to hear it (out of genuine interest, because I can’t personally think of any).
It’s great that you have such low cost lending options, a lot of people don’t
It would’ve useful for people who need to make a large purchase which they have the funds to cover, but don’t want to use all their safety net if possible. Yes you can apply for a loan up front but this way you don’t need to apply, it’s just there afterwards if you qualify
2 Likes
A scenario to think of, a person needs to buy a new appliance after saving for considerable time. The cost is a spend they need to buy, but didn’t think of taking out finance, as may well impact the credit score or offer very high rates. Person now doesn’t have the emergency fund saved because of the buy. Something happens and money needed, payday loan being considered, but instead monzo allows them to spread the cost at lower rate, no application forms and a much better plan
6 Likes