Last post: Oct 4, 2013
The telephone directory service company has just launched 118 118 Money that will offer personal loans to consumers having a hard time getting credit from mainstream lenders. Loans can be for as low as £1,000 up to £5,000 with annual interest rates ranging from 36% to 80%.
The telephone directory service company has just launched 118 118 Money that will offer personal loans to consumers having a hard time getting credit from mainstream lenders. Loans can be for as low as £1,000 up to £5,000 with annual interest rates ranging from 36% to 80%.
Although it targets the same market as payday loans, the company said it would not be directly competing with these since 118 118 will be offering smaller loans at an extended time period. Standard interest rates would be 35.9% repayable from a period of 12 to 24 months. "Second chance rates" of 79.9% APR would also be available for those with very poor credit records. Loans for a low as £2,000 can be spread out for up to two years, unlike mainstream lenders whose minimum loans are £7,000 and are available only for short-term periods.
The company will be targeting a middle ground in the credit spectrum. On one end there are good credit holders serviced by banks and building societies and on the other end there are payday lenders with high rates and fees. Finding a balance between these two is still a niche market and only a few companies serve this sector.
Similar companies would be Amigo Loans with 49.9% APR, whose loans can be guaranteed by a family member or friend. Others in the same range are Aqua with 35.9% APR and Vanquis which starts at an APR of 39.9%. Loans from these smaller companies may have more risks involved compared to a well-established lender such as a bank or building society that can offer flexible payments such as over payments in order to clear the debt earlier.
Comparing 118 118's figures with that of payday loans have shown favorable results. Let us look at a £1,200 loan from QuickQuid payable in 10 months with an APR of 1,362%. This produces a total of £2,831.34 paid back, plus an interest of £1,631.34. Compare this to a similar loan of £1,200 from 118 118 Money for a minimum term of 12 months results in £1,411.44 paid back and an interest of only £211.44.
Loans from 118 118 can be applied online. Those that are accepted will contacted by phone for identity verification and to explain the next steps in the process. Five years have gone since the credit crunch, but lending still remains inaccessible for many hard working individuals. This void is what 118 118 aims to fill. At Choice Loans we can offer Unsecured Personal loans for clients with clean credit records for terms of up to 5 years at singe digit APRs. Apply here for an Unsecured personal loan.
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