Is it worth it? Should you take out a personal loan with high-tech lender LiveLend
Personal loan rates often appear a bargain in adverts from banks with deals as low as 3 per cent. But these are often teaser rates available only to borrowers with squeaky clean credit records.
More than one in five applicants will not get a look in – and will be stuck instead on a higher interest rate for the duration of their loan.
High-tech lender LiveLend has now introduced a new type of loan where borrowers with a less than sparkling credit record start on a higher rate of interest, but benefit from the rate dropping if they manage to clean up their credit score.
LiveLend has introduced a new type of loan for people with poor credit record score
It promises to deliver rate cuts every three months with 2 percentage points chipped off the loan rate for every 25-point boost in a person’s credit rating.
Interest rates range from 10 to 37 per cent and the loan can be paid off early without penalty. Credit scores can be improved not only by meeting repayments on time but by fixing any mistakes on a credit record – such as an old account appearing as ‘open’ when it is ‘closed’.
Signing up to the electoral roll and making sure your name is on utility bills can also help matters.
Andrew Hagger, of product scrutineer Moneycomms, likes the fact people are encouraged to sign up for their credit score – something other lenders could learn from.
VERDICT: An innovative and flexible loan – but starting interest rates are high. Even someone with a slightly flawed credit record can get a loan from a mainstream lender for less than 10 per cent. Before diving in, compare deals elsewhere.