Loan Offers - page 2
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However, the application has gone in and the lender duly responds with an offer, very possibly at an interest rate which is higher than the one advertised. At this point the potential borrower may get highly indignant and demand the advertised rate, but the lender is not obliged to comply. He can claim that he has acted totally within the requirements of the CCA by providing 66% of his clients with the advertised rate, but regrettably the applicant represents a part of the 34% who do not get that rate. How can anyone prove whether the 66% requirement has been met? In practical terms, they can't, so they either have to accept the offer or continue to shop around, with each credit check adding more negative points to their record.
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For all their good intentions (and they are doing some sterling work on behalf of borrowers), the Office of Fair Trading (OFT) cannot hope to check on every lender in the market place and have to depend on reports from individuals to give them a picture of the effectiveness of legislation on their dealings. Since public knowledge of the related laws and requirements is inevitably very sparse, useful information can be difficult to obtain.
A factor which is not obvious but which has a substantial effect on the protection of the individual is when an application for a loan is made, not as a result of an advertisement where an APR is quoted, but in response to a direct mailing which offers a personal quotation. This ensures that any agreement is outside the rules of advertising and the customer has lost any protection given by the OFT in the CCA. Again, credit checks will be made, the customer's record will be yet poorer and future interest rates will go a notch higher.
Thus the vicious circle is given fresh impetus and may arrive at the point where someone with a blameless record on loans may find it impossible to obtain one, due solely to an apparent record of frequent failed attempts in the past. This suggests that 'personal loans' should not be considered and advertised rates be given preference, under the old adage of 'better the devil you know'! At least in this way an applicant would have a fair idea of what they were committing to; also support from the OFT should be forthcoming if they are told that they are one of the unlucky 34%, and they decide that enough is enough and demand proof.
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