Wednesday 14th March 2007: RaboDirect, Europe's largest online savings and investment bank, has entered the personal lending market with the launch of the RaboDirect Credit Account. Ireland's first "revolving" line of credit account will see borrowers personally controlling a pre-approved extended line of credit online enabling them to draw down as much or as little as they want via their RaboDirect Credit Account effective from next Tuesday 20th March.
The introduction of the Credit Account, according to RaboDirect, recognises the reality that the majority of people tend to have life time borrowings which they roll over as they pay off the sum.
Under the terms RaboDirect will pre-approve amounts from €2,500 up to €50,000. Once the credit amount is approved the borrower decides when and how much they want to draw down. The Credit Account is structured in such a way as to facilitate flexible repayments, based on a variable rate of interest, over the term of the credit line as well as for lump sum repayments on all or some of the amount without penalty. There is a monthly minimum payment of 2% and maximum of 4% with the borrower able to adjust monthly payments up or down online as well as the date of payment. The nature of a revolving line of credit facility means that your repayments stay the same even if interest rates increase or decrease. The term of your loan will adjust as rates move up or down. This means that customers will have the peace of mind knowing that repayment instalment won't change.
Borrowers who do not initially call down the full amount of credit can "at a click" draw further sums at later dates at their convenience and have no need for further approval as it is pre-approved. In addition, borrowers can apply to have their pre-approved amount increased to a higher amount up to a maximum of €50,000 based on a minimal payment of €1,000 on the credit account subject to credit approval. Credit amounts are designed to roll over so that once approved and repaid the borrower can simply apply for another credit limit online without recourse to lengthy application processes.
The following variable interest rates will apply on the approved credit limit:
€2,500 - €9,999 - 9.50%
€10,000 - €19,999 - 8.45%
€20,000 - €50,000 - 8.15%
The rate is only payable on the amount drawn down and no other facility charges apply e.g.: application fees, document fees etc. For example, you have a credit limit of €15,000 but only draw down €9,000. You will pay 8.45% interest based on your approved credit limit and only pay interest on the €9,000 drawn down. You can at any time drawn down the remaining €6,000 of your limit as and when you decide you need it. Unlike some other lending providers in the market, RaboDirect's rates are clear and transparent. The published rates you see are what you get.
RaboDirect has partnered with Friends First Finance to provide the Credit Account with the latter approving all credit approvals and payment protection insurance options via RaboDirect's secure on line application process. While the purpose of the credit remains anonymous a strict criteria is applied for acceptance of applications.
RaboDirect has created a streamlined online application process where it typically takes only 5-10 minutes to submit an application. Applicants can use a quick credit calculator to get an indication of how much they could borrow. Customers will receive approval in principle by email within one hour if before 4.00pm on the day or immediately the following day if after 5.00pm Monday to Friday where they will then receive a credit agreement and details of documentation to accompany same, hard copies of which must printed off and signed and returned to Friends First Finance for processing. The credit limit will be available online within 5-6 days of initial application. Optional payment protection at competitive rates is also available for both PAYE and self employed borrowers.
All approved applicants are issued with a RaboDirect Digipass, a secure device to manage and authenticate their accounts and which uses leading edge technology that surpasses anything currently available from all the other banks in Ireland. Existing RaboDirect customers can use their current Digipass.
Commenting Greg McAweeney, General Manager, RaboDirect said "This is an innovative approach to lending and is already widespread in other EU countries. It operates as a self service facility that recognises the reality that the majority of people have borrowings throughout their lives and simply top up or roll over their loans as the need arises. In countries such as the Netherlands it is seen as a practical solution that gives the borrower control over the amount borrowed in terms of accessing as much or as little as they want at a time when they want to. As an online bank you can make an online application at any time during the day or night, seven days a week without ever having to go to a branch or ringing a bank's call centre. As with all RaboDirect products, we give control of your finances back to the customer through innovative products and online services.
In contrast to existing loan products, which demand fixed repayments on a fixed sum with very little flexibility to manage the terms of payment once agreed, the borrower can adjust the repayments to suit circumstances. So if a customer wants to pay down their credit account earlier they can do so without penalty or alternatively, you can lower your repayments for a period if you need to take the strain off your cash flow. Thus the RaboDirect Credit Account provides for better cash management at a cheaper cost compared to expensive overdrafts, credit card borrowings and referral charges. It offers convenient borrowing whether it's to manage cash flow, consolidate existing debt or make a purchase for large ticket items such as a car, home improvements and the like".
Please note: As at the 1st of July 2009, the RaboDirect Credit Account is no longer available for new applicants.