Clever bunch of people - finance question

Retired_member41 · Aug 24, 2014

Hi,

I have a question, and yes I know the businesses concerned will say it is up to them as its their business, but with all the freedom to advertise and things they sign up to saying they will be fair, can anyone actually explain this.

When someone applies for a loan, in this case it was a loan to pay off an old loan and increase it slightly, but in reality its a whole new loan.

They haven't ever re payments ever been late or missed and the bank itself constantly calls them to offer loans.

Now I know what they say about credit scores and how much people earn, part time, full time employed, residential status etc, so most people with these issues, when taking out loans always expect they wont get the best rate.

So, the bank, offered them a loan for the full amount over the exact same period.

Now that's the important bit, same amount same period, from their own bank who has proof of excellent custom.

And yes their interest was much higher than the advertised rate. She has a new baby on the way, so although helpful, she will not be taking it at that rate.

So can anyone explain why?

If they said there is more risk, which they haven't, so they need their money back quicker, should really have them offer them less over a shorter period, they have many years history showing no sign of risk.

I know people just accept this, but is it fair lending, they sign up to numerous things which allow them to trade and advertise saying they will be fair.

Just seems mad that no one has challenged this. I know they think they can have it both ways but can they really?

I'm looking at helping them take this further, so although I enjoy peoples opinions, I am really after facts and insights from anyone in the know so to speak.

Thanks

tifosi · Aug 24, 2014

The banks have taken a hit with their shoddy dealings & PPI.

I had a meeting with a business manager for Natwest/RBS a while back and he spent a fair amount of time pretty much slapping himself on the back eulogising about the fact the bank were making more money to pay off the government and 'get their bank back'.

Now, where are they getting the money from? No educated guesses needed.

It's not about risk, it's about reward. For the banks.

The whole 'credit system' - from credit cards to personal loans is a culturalised scam to snare us in a lifelong delusional ever decreasing spiral.

Our parents & grandparents called it 'paying on the tic' and avoided it at their peril.

Pay off the loan, don't get another one, save up and pay for it when you have the money, do without until. Get rid of your credit cards... I have.

Retired_member41 · Aug 24, 2014

Thanks so much for the information, great idea sent.

cm1975 · Aug 24, 2014

Could be that the bank keeps the best rates for new customers. Many companies won't reward loyalty. They assume that you will just stay with them, as you have already dealt with them.

For example, how often does your insurance company offer a good deal on a renewal? They assume you're happy with service and you will just go with them again, instead of shopping around.

Retired_member41 · Aug 24, 2014

cm1975 said:
Could be that the bank keeps the best rates for new customers. Many companies won't reward loyalty. They assume that you will just stay with them, as you have already dealt with them.

For example, how often does your insurance company offer a good deal on a renewal? They assume you're happy with service and you will just go with them again, instead of shopping around.

That is so true of insurance companies, every year we end up changing as the renewal letter has a big joke figure included, plus the kids want another meerkat lol

dazc · Aug 24, 2014

Caz said:
I know people just accept this, but is it fair lending, they sign up to numerous things which allow them to trade and advertise saying they will be fair.

Just seems mad that no one has challenged this. I know they think they can have it both ways but can they really?

If your friend says she has been offered a better rate elsewhere they will probably revise their offer.

julian · Aug 24, 2014

..what does my head in is mobile phone deals. (slightly off topic rant sorry)

e.g. I been loyal customer to vodafone for nearly 20 years -yet I get no better deal than some penniless little teenage scraggie who defaults on payments, stamps on the screen when feels like time for an upgrade, and jumps networks every 5 mins looking to work the system.

You could say its my own stupid fault for not working the system better myself

</rant>

Philnorris · Aug 25, 2014

Banks will always win. Creditors, albeit cards or phones, always win.

I dont have any debts and i hope to stay this way but it counts against me. I have no history of paying a debt therefor i am a credit risk...wtf ;-)

Always shop around for contracts and experience has told me that even if my phone company offers me the best deal, i cancel anyway and write them an email explaining why. So far they have always got back to me with a better offer.