Lloyds TSB Changes Lending Policy
The country’s biggest personal loan provider has a new pricing strategy that could make it even harder for people to find the best deal.
Lloyds TSB has changed the way it prices loans. Rather than advertising a rate which is offered to the majority of successful applicants, it has moved to a personal pricing strategy.
This means that would-be borrowers will no longer be able to see the typical rate being offered by the bank – they will have to apply to find out what kind of deal they will be given.
Customers with good credit histories will be offered the most competitive rates, but if the bank thinks there is a risk of the customer defaulting on a loan, a higher rate of interest will be charged.
This is not unusual. Lenders always run a credit check when evaluating a loan, credit card or mortgage application. However, most advertise a “typical” rate and this must be offered to at least 66% of successful applicants, which at least gives you some idea of how much the loan will cost before you apply.
However, by changing to personal pricing, Lloyds TSB will stop advertising a typical rate. Borrowers (who must also be existing customers) will have to apply in order to see what kind of deal they will be offered.
Every time a credit check is made on a person, a mark is left on the credit file. A Treasury Select Committee criticized the way the market works – even among lenders that do advertise a typical rate.
Multiple credit applications can have a negative impact on your credit score, making it harder for you to shop around for the best deal.
Without showing a typical rate to guide borrowers, Lloyds TSB’s latest move may make it even harder for customers to find the best deal.