By Pádraig Hoare
Spanish consumer finance firm Avantcard has said its personalised loan rates for customers will allow it to compete in the sector currently dominated by banks.
Avantcard, which bought the Irish operations of MBNA in 2012, said its new offering will allow each customer to have a credit card or personal loan approved based on their individual financial and credit profile.
Managing director Chris Paul said a personal loan of more than €20,000 for a customer with an excellent credit history would see an APR of 7.5%, while a rate of 13.9% would apply on a personal loan between €5,000 and €10,000 for a customer with a “higher risk”.
There will also be rates for customers in between both ends of the scale, he added.
However, existing customers with an “excellent” rating currently paying a higher APR on a personal loan will not be re-evaluated, Mr Paul said. Such customers can apply for a new loan, he added.
On credit cards, its typical APR is 22.9% but customers considered to have a better credit history are now being offered 20.9%, he said.
Vulnerable customers will not be approved for personal loans or credit cards if they cannot prove they can afford it, he said.
“We will consider every application carefully but we do not approve everyone. It might be that the risk may be just too great for us, and might not be convinced the customer will pay us back. We will look at the customer’s circumstances.
“We have a duty of care that we take very seriously and if we don’t think a customer is able to afford the finance they’d like to take on, we will say no,” he said.
He said Avantcard is confident it can compete with the bigger lenders for a slice of the market.
Avantcard said last month it had reached an agreement with Tesco Bank to acquire its Irish credit card portfolio.
“The only way we will succeed is offering something different to what customers can already get.
“This is one example of how we are approaching things in a different way. We’re off to a strong start, having announced in April that we will be buying Tesco Bank’s credit card portfolio, which has 27,000 customers.
“The way we will grow is to issue more cards and loans, and to build our brand through marketing. We will also grow with small but important partnerships, such as that with Chill Insurance, who help us issue loans while we provide finance.
“We’re in conversation with other organisations to do something similar. To pull off this deal with Tesco Bank is testament to our credentials and we are looking to substantially grow the business over the next few years,” Mr Paul said.