A change in the lending strategy by Lloyds TSB, the nation’s largest lender, may make personal loan deals from high street lenders more expensive for consumers in the future.
Lloyds is moving away from personal loans based on an advertised typical interest rate which, the law dictates, must be offered to 66% of successful applicants.
From now on, Lloyds will not advertise a typical rate, but will switch to offer loans based on personal pricing, with each customer being offered a deal based on their individual credit rating.
This is the second restriction on lending from Lloyds, which has already declared that borrowers must be existing current account customers of the bank.
By dealing only with existing customers, Lloyds can check its records on each customer who may seek a personal loan, and can assess how responsibly the customer has conducted his or her financial affairs in the past.
Customers who have defaulted on repayments of other loans, their mortgage, or have otherwise tainted their credit record are likely to face relatively high rates of interest, if a loan deal is offered to them at all.
If other lenders follow Lloyds’ example here, obtaining a personal loan looks likely to become more difficult in future. Every application for a personal loan leaves an imprint on your credit record, as a note is made each time a lender runs a credit check.
Lloyds customers must now make an actual personal loan application, before they find out what rate of interest they will be offered – making another such imprint on their credit file inevitable.
