1.39 million people refused credit for loans since September
Around one in three personal loans can now be approved with a quick online decision, new analysis* by MoneyExpert.com shows.
The independent financial comparison website believes this may be fuelling the number of applications that are ultimately rejected, as applicants rely on online forms without either checking their credit status or speaking to an advisor.
And new research by MoneyExpert.com** shows that around 1.39 million people have had loan applications rejected in the last six months – equating to around 320 applications being turned down every hour.
Around 31 of the 89 possible loans on the market are available with an online decision. MoneyExpert.com warns that while money can be borrowed in a matter of minutes, lenders can also reject applications just as quickly, something which could affect applicants’ credit rating.
Sean Gardner, Chief Executive of MoneyExpert.com, said: "These days we’re all short of time and providers are keen to point out that they can offer you credit quickly. While saving time on your application may seem important, you have to weigh up what matters most – convenience or getting accepted.
"Loan providers are getting tough so applicants shouldn’t assume that, just because the loan is available online, acceptance is automatic. The same rigorous rules apply however you request credit and if you’re rejected too often it’ll be your credit rating that suffers.
"If time is short the best option is to use an online credit profiling tool to assess which products are best suited to your needs before you apply. This will reduce the risk of being rejected and doesn’t take long to complete."
Around 80 per cent of loans are now available through an initial internet enquiry, with little to choose between average rates across all application methods.
Sean Gardner added: "The worry is that people might be tempted to apply for more than one loan at a time as they know they’ll get their responses quickly on the internet. With providers refusing credit to 320 people every hour, there’s clearly a need for funds out there from people with less than perfect credit records.
"There are alternatives to unsecured loans. For example homeowner loans are often just as competitive as unsecured rates. If you’re regularly getting refused credit take your time to research your options before reapplying – there are many free tools online which can help you. Alternatively, you can contact your local Citizens Advice Bureau if your situation is acute."
Providers that will give an online decision, often emailing a response direct to applicants within minutes, include the AA, Intelligent Finance, Natwest and Smile.
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* MoneyExpert.com analysis of the Defaqto Aequous database, 02.04.07
** YouGov interviewed 2,291 GB adults online between March 21st and 23rd 2007