Zopa finds two thirds of loan applicants are charged higher rate than advertised
ZOPA research has found that two thirds of loan applicants are being offered a higher rate than advertised by banks and is calling for a fairer and more transparent loan market.
The peer-to-peer consumer lender, which is launching its own digital bank, has published a report which included a mystery shopping exercise and research amongst loan customers. The study found that successful applicants were offered an average rate of six per cent – nearly double the average advertised rate of 3.4 per cent.
The mystery shopping exercise was conducted in May 2019, with loan applicants applying at Barclays, NatWest, RBS, Santander, HSBC, Lloyds, Sainsbury, Tesco, M&S, Clydesdale.
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The survey research was carried out amongst 1,000 current loan customers between 8 May and 19 May 2019.
The majority of personal loan providers in the UK will not show customers the actual rate they’ll be offered until they’ve completed the loan application, Zopa said.
“They also often leave an unnecessary hard mark on the customer’s credit file before they’ve received a personalised quote – impacting their credit sore in a way that is likely to raise future quotes from other suppliers,” Zopa added.
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In contrast, Zopa shows customers the actual rate they will be offered prior to them applying for the loan and will not mark a customer’s credit file until after they’ve applied for the loan.
As part of its campaign for a fairer loan market, Zopa is calling for three key changes: the introduction of actual rates being shown to potential customers; the termination of ‘hard searches’ prior to showing a personalised rate; and a quicker, online loan application process.
“Customers deserve a fairer personal loans market. Zopa was set up to challenge a market where misleading loan rates are costing people money and wasting their time,” said Andrew Lawson (pictured), chief product officer at Zopa.
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“For most loan customers, what they see isn’t always what they’re going to get, and that’s not right. In contrast, customers applying for a Zopa loan can see the actual rate they are going to get and whether they’ll be approved for a loan before applying and without marking their credit file.”
“It’s about time the industry commits to reforming its practices so that customers can shop around to get the best deal.”