Revolut has today announced a partnership with peer-to-peer (P2P) loan firm Lending Works to provide instant credit at half the cost of UK banks.
In just two minutes, Revolut customers can now apply for credit from anywhere in the world via their smartphone and receive funds instantly to their Revolut account.
Revolut’s credit feature taps into the Lending Works’ P2P platform, which matches individual lenders with those looking to borrow money. This process cuts out the banks entirely, meaning that Revolut customers are charged just £52 on average to borrow £1,000 over a 12 month period, with a representative APR of 9.9%. In contrast, a recent survey of five major UK banks, whose personal loans are notoriously expensive with time-consuming application processes, showed that consumers are charged £120 on average to borrow the same amount over a 12 month period, with a representative APR of 23.8%*. Credit card rates are also sky-high, reaching a record average purchasing rate of 21.6 per cent APR in March 2016 (Source: moneyfacts).
Representative example: Borrow £1,000 over 12 months at 9.9% APR representative. Monthly repayments of £87.68 and total amount payable of £1,052.15. Interest rate of 4.5% p.a. (fixed) and total fees of £27.50. The rate you are offered may differ from the Representative APR shown and will be based on your personal circumstances, loan amount and repayment term.
The new credit features mean Revolut is the first company to approve and pay out P2P loans instantly. The Revolut app uses smart-tech so that customers are only asked to state the amount of money they require, their monthly income and residential status. Revolut’s data on the customer is fed into the credit decision model to increase the chance of thin-file customers being at accepted at the best rate. Customers can then see the total cost of their loan and how much they will pay back on a monthly basis. As soon as customers accept the terms in the app, they can use their contactless Revolut card to spend their credit anywhere in the world, with the real exchange rate and no transaction fees. The entire process takes as little as three minutes.
The Revolut app currently offers UK users credit from as little as £500 to a maximum of £5,000, and users can adjust their repayment period between 12 and 60 months. In contrast to many banks, there are no fees to repay the loan early.
Revolut is working with a wide range of innovative providers to expand its consumer product and ultimately change the way people manage their money around the world. This includes travel insurance you can activate in a tap, automated investing and high interest multi-currency savings accounts - all to be managed within the app. Revolut also plans to enable a P2P lending marketplace amongst its own user base of 530,000 Europeans, ultimately allowing customers to both lend and borrow money across borders at competitive rates.
Nikolay Storonsky, Founder and CEO, Revolut:
“The fact that anyone can now apply for credit from anywhere in the world in two minutes, get the money instantly and spend it with a Revolut card without fees in any currency is mind-blowing. The same process to apply for a loan or credit card with my bank would take a week and cost me double.”
Nick Harding, Founder and CEO, Lending Works:
“We are delighted to be partnering with Revolut in this venture, which breaks new ground within personal finance. We identify strongly with Revolut’s commitment to making financial services fairer and more efficient for consumers, and the fact that they have chosen our platform to deliver instant credit represents a gratifying seal of approval of the innovative technologies we use.”
*Survey of five UK banks (Natwest, Lloyds, HSBC, RBS and Santander) carried out on 16th February 2017 using their respective representative APRs.