UK challenger Starling is rolling out its first personal loan products, enabling customers to apply in minutes, in-app for up to £5000.
The unsecured personal loans give customers access to the money as soon as they are approved as well as the power to decide both the day repayments are made and over what period. There are no early repayment penalty fees.
Starling is stressing transparency, with full visibility of what people are borrowing, for how long, their monthly payments and what the total repayment will be at the end of the term - all displayed in the bank's app.
The bank is linking the loans to its overdrafts. Anyone approved for an overdraft can apply for a loan, which will "usually" be cheaper. They will be able to borrow as much as they have left in their overdraft, so a customer with £2000 still to spend of a £4000 overdraft, will be able to turn anything up to £2000 into a loan. When they do, Starling will reduce the overdraft by whatever they borrow - then it will bump the overdraft back up again when the loan is repaid.
Stuart Leak, head, lending, Starling, say: "Our spread the cost loans offer a structured repayment schedule giving customers greater flexibility and control of their money.
"If an unexpected bill hits your account, or you are faced with an unavoidable large expense, you’ll be able to spread the cost with a loan and choose a repayment method, including both the time period and monthly repayment amount that suit you."