Jonny Pease argues Revolut's personal loan rollout to over 14m customers is a concern, since the advertised 6.9% APR goes only to just over half of accepted applicants.
Jan Watermann calls Revolut's loan terms surprisingly good, though not market leading, but says the minutes-long application is shocking.
Jonny Pease says regulators should limit loan advertising, pointing to Revolut requiring a questionnaire before crypto investing but not before borrowing.
Why most borrowers never get the advertised personal loan rate
UK personal loans cost most borrowers more than their headline rates suggest. Lenders only have to give the advertised rate to just over half of accepted applicants, and they reward borrowing more with cheaper pricing. Using Revolut's UK launch as the hook, the hosts argue people should avoid personal loans where possible and cover unavoidable costs with 0% credit options instead.
Takeaways
Headline rates reach only about half of borrowers. A representative APR must go to at least 51% of accepted applicants, so the rest can pay far more. Revolut ranges from 6.9% to 29.3%. Nationwide advertises 5.9% but tops out at 29.9%, and potentially 49% of its customers could pay that.
Borrowing slightly more can slash your rate. At Monzo, £10,000 costs about £3,541 in interest, while £10,100 drops to 10% and roughly £1,500. Nationwide quotes 6.9% for £7,499 over five years and 5.9% for £7,500. Jan Watermann says banks push size because bigger loans earn more interest.
Revolut's terms are decent, not market leading. Revolut lends £7,500 to £25,000 over one to five years at a 6.9% representative APR with no early repayment penalty. Nationwide and Monzo start a point lower at 5.9%. Anyone borrowing under £7,500 faces a higher APR.
Apps have made borrowing dangerously frictionless. A loan once took days and now takes minutes. Jan Watermann found Revolut's loan button below his low balance, leading into a hard-to-exit flow that sends push notifications to finish. Jonny Pease says digital lending may enable darker tactics, without accusing Revolut.
Repayment terms quietly add cost. Payment holidays, such as Tesco Bank's two months, pause repayments but not interest. UK law lets lenders charge up to two months of extra interest for early repayment. Revolut and Monzo charge nothing, and Jan calls such penalties harsh on stretched borrowers.
Cheaper ways to cover a purchase
Do not borrow for anything you cannot afford. Essentials like a broken washing machine or car repair may justify it if you have no savings. Holidays do not.
For a new purchase, a 0% purchase card works best. TSB Platinum offers up to 26 months, then 24.95%.
To move existing debt, use transfer cards. Tesco Bank's money transfer card charges 3.99%. TSB's balance transfer charges 3.49% with a 90-day window that starts when the card opens.
For short gaps, Klarna offers 60 days interest free, though buy now pay later reports to credit files.
Clear every balance before the deal ends, or interest starts and can rise.
Compare quotes using soft searches, since repeated hard checks can worsen offers. Tesco Bank had the highest rate found, at 34.5%.
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On this episode 2
Show 1
Should loan marketing be regulated
Revolut has repeatedly emailed Jan Watermann offering a holiday loan, and EU listeners report similar emails. Jonny Pease finds this disturbing.
Jan argues promotion is acceptable in a free market if the facts are correct, and that financial education matters more than prohibition.
Jonny wants loan advertising language regulated, with the rate shown alongside a warning not to borrow. He notes Revolut requires a questionnaire before crypto investing but none before borrowing.