Price certainty on Personal Loans

Nick Smith, Head of Personal Loans, writes for us this week on personal loan price certainty.

"I hate being kept in the dark, particularly when it's about something really important to me. My wife and I are currently buying a new home and we fell in love with a house in a leafy village. That feeling of excitement when you find a house you like and begin mentally moving-in is incredible. Unfortunately, another couple fell in love with the same house over the same weekend, and so something of a bidding-war started.

House searches start off easy, with every house having an asking price, guide price or similar but depending on a number of factors, you can end up paying under or over the odds quite substantially, and that tension around how much you should pay, and whether you can afford it, can be really stressful.

This got me thinking about something similar in Personal Loans. Whenever we shop around for a loan, we often look at the "representative rate" in order to compare providers, but this is only half of the story. The representative rate is the rate that at least 51% of successful applicants must get, but once your application goes through, your personal rate could be lower, or more worryingly, much higher than the representative rate would suggest.

In this day and age, with numerous credit reference agencies holding data on all of us, I passionately believe that customers shouldn't accept this uncertainty - we deserve to know exactly what a loan is going to cost us and we deserve to know that before we apply, leaving a credit footprint that could impact on our ability to get credit elsewhere should we not be happy with the APR we're ultimately offered.

Some lenders, including TSB, do provide a personalised quote before you apply for your loan, meaning that you can get a clear overview of how much interest you'll be asked to pay and the exact monthly cost before committing yourself. Whichever loan provider you choose to go with, I recommend that you make sure you understand whether the quoted price is the "final" price before you decide whether or not to proceed with your application.

Incidentally, we got the house! Now I just have to figure out how much the new furniture will cost..."

Nick Smith
Head of TSB Personal Loans

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