Wedding loan applications fall drastically
The number of loan applications to pay for weddings falls drastically as the credit crunch stops people tying the knot.
The Wizard has noticed a significant drop in the number of people who are applying for personal loans to pay for their wedding. The data - which is compiled as part of our loan application process – reveals that attempting to pay for the big day has made up just 3% of all loan applications received. In the meantime loans to consolidate debt have risen to make up almost half of applications received (46%) - a clear indication of the financial stresses and strains that many people find themselves under.
It is not completely surprising to see that couples are delaying their big day due to the current financial climate. In this day and age weddings are extremely expensive affairs and with partners and their families feeling the pinch across the UK it seems that this year’s wedding season may be a little quieter than in years gone by. It is sad that many may have to put their lives on hold as they wait for the economic climate and their own situations to improve. The fact that consolidation of debt is the most rapidly increasing reason to apply for a personal loan illustrates the extent of the financial hole some people find themselves in and highlights how important it is to find the right loan agreement for each individual and borrow wisely.
Credit score wrecked by lenders?
In an article published by the Guardian on Sunday July 12, Sam Dunn denounces how banks fail to use "soft quotations" to quote for their loans despite the Information Commissioner's Office (ICO) best practice guidance.
The problem is that for most potential borrowers the only way to get a true quote is to apply with the bank. The bank therefore records the quote as an application on your credit file. If you get too many quotes, banks will take that into consideration when weighing the risk of lending to you (see previous blog article on credit searches).
What you really need is a way to get a quote without applying for the loan. That's exactly what we do. The Lending Wizard shows clearly that there are lenders who want to change things for the better and are open to using quotation searches to give accurate quotes -- a point which is certainly not elaborated on enough in the Guardian's article.
Beware of hidden credit searches
Every time you apply for a mortgage, a loan, a credit card or you want to buy anything on finance, you will be credit searched. That credit search leaves a ‘footprint’ at the Credit Reference Agency which indicates what type of credit you applied for and when.
When you apply for credit, most lenders will look at the number of recent credit footprints as part of their decisioning process. Too many in a short space of time will make lenders wary and could increase your chances of being declined. For a lender, those searches could mean that a number of lenders have already turned you down or that you have recently taken out a lot of credit which could result in you being overstretched.
The reality is that the lenders will not know the exact reasons why, but in today’s world they are more cautious than ever and so to avoid the risk of more bad debt (people who can’t repay their loans) the lender may just decline the application.
There are some excellent insurance aggregator sites on the internet which, if you fill in one application form, will tell you the insurance premiums from each the insurance companies so you can then pick the best product for you.
However, some of these same websites also offer loans but unlike insurance you have to fill in an application form for each lender. For every loan application you complete you will be credit searched. If your first application is not accepted, then you run the risk of generating several credit searches and that’s where your problems could begin.
Remember, The Lending Wizard is different, it only does a soft credit search to obtain quotes from all of the lenders on its panel so you can protect your credit profile – simples!
Is the Comparison Consortium genuine?
The Financial Times in a recent article has announced that The Comparison Consortium, a trade body launched in February this year, plans to unveil its code for online insurance aggregators and professional guidance for insurers who use them.
The Wizard welcomes the initiative and hopes it is genuine in its desire to improve transparency and clarity not just in the insurance comparison market but also in the loan comparison market.
Sponsored results, misleading typical rates and not clearly distinguishing between secured and unsecured loans are all widely used practises within the loan comparison industry - loan aggregators are putting profit ahead of treating customers fairly. Furthermore, such sites also do not warn customers that making several applications to different lenders can harm your credit rating.
These are the very issues which The Lending Wizard is addressing and which make it unique among other comparison sites. These are also the issues that a body like the Comparison Consortium should recognise and address. It would then prove it is not just a mere cosmetic PR exercise.