UK challenger bank Monzo has formally launched a new personal loans service following an earlier trial with 4,000 customers.
Loans will be available up to 60 months, with interest rates between 3.7% and 6% for lending from £7,500 to £15,000, increasing to up to 20.4% for loans from £200 to £7,499.
Over the past 9 months or so, we’ve gradually been offering loans to more and more of our customers. We took our time to make sure we get it right. We did a bunch of user testing and research to understand the most painful things about borrowing money.
Compared to payday loan lenders 20.4% isn’t an insanely high amount. Comparatively, Starling‘s overdraft fees are only 15% – so some users may find this would be a better method of borrowing money for short periods.
Users can repay loans early and make extra payments, set and change repayment dates direct in the app, and talk to customer service agents via live chat to discuss the loans.
Last year Monzo Chief Executive Tom Blomfield said regarding their at the time upcoming loan service: ‘I don’t think you should force people to borrow thousands of pounds if they don’t need thousands of pounds. They just need £200 for a short-term need for three months and it’s a flexible tool. I don’t think it’s for everyone.’
In August Monzo started testing charging customers a £7.50 monthly fee for a new metal bank card.