With clever marketing and a high level of competition, the unsecured loans market is going from strength to strength. But how many of us actually truly understand what we are being offered. For instance, a ‘teaser rate’ could be offered to entice you into a product, but then you end up being offered a far higher rate, why?
Saga Money have conducted research that suggest that the loans market in the UK is “not fit for purpose”, suggesting that it is not fair to consumers to offer such ‘teaser rates’ then ultimately offer a much higher rate on application. The research confirms that the average advertised rate of the top ten lowest providers is 3.23%; with Moneyfacts own data showing that there is indeed a deal at just 2.8% offered by Sainsbury’s Bank. However, the Saga research data confirmed that applicants were far more likely to be offered an average APR of 8.06%
Furthermore, it seems that those over 50 could be missing out, despite a very high level of demand for unsecured loans borrowing from this age group. The Saga research confirmed that 1 in 5 of those over 50’s that were surveyed have applied for an unsecured loan in the last 3 years, with 30% of applicants just in their 50’s alone. However, the research showed that many lenders are “not in tune with the changing needs of todays over 50’s”; it seems lenders were very inflexible, especially in regard to income criteria and requirements. Therefore those that could comfortably afford the repayments of a loan were not offered one, usually because they had no ‘monthly payslips; and their income was derived from other sources.
Saga said “People are continuing to earn a healthy income later in life through a combination of wages, pension and investment income, yet many providers apply an arbitrary age limit on to whom they are willing to lend money.” Saga moneys managing director Nici Audhlam-Gardiner also highlighted that there was still a high demand for unsecured loans in later life, “whether that is for home improvements or to pay for children’s education”, and that being turned down because of their age, or being offered rate much higher than they applied for, was “frustrating” and somewhat confusing for older borrowers. She added, “These are often people with a pension or investment income or part time earnings who are able to cope well with loan repayments, but find themselves shut out of the market, because only their pay slip is being taken in to account. It is time the market changed with evolving lifestyles.”