Revolut has launched its first personal loan in the United Kingdom, offering customers the ability to borrow between £2,000 and £25,000 at interest rates starting from 6.9 per cent.
The launch marks the financial technology company's first move into offering consumer credit as a licensed UK bank. Borrowers can choose to repay the loan over a period of between one and five years, and there are no fees for early repayment.
Francesca Carlesi, chief executive of Revolut UK, said that by "bringing credit into the Revolut ecosystem, customers can see exactly how their repayments fit alongside their day-to-day budgeting, spending and investing all in one place".
The loan is an app-only product, meaning customers open and manage the borrowing facility alongside their other money inside their Revolut account.
Revolut personal loan rates and repayment terms
The headline rate of 6.9 per cent is the representative annual percentage rate (APR) available on loans of between £7,500 and £25,000. Revolut said that its representative rates can go up to 29.3 per cent, with the actual rate a customer receives depending on the amount borrowed and their individual financial situation.
Under UK consumer credit rules, a representative APR is the interest rate that a lender must offer to at least 51 per cent of applicants who are accepted for credit. The figure combines the interest rate with any compulsory charges to give borrowers a standard benchmark for comparing loans across different providers.
Unsecured personal loans allow retail bank customers to borrow a fixed lump sum and repay it in monthly instalments over a set term without putting up an asset such as a home or vehicle as collateral. Because Revolut does not charge early settlement fees, borrowers can pay off their balance ahead of schedule without penalty.
Customer eligibility rules and credit checks
Revolut is rolling out the personal loan in phases over several months. The product is currently available only to a small number of customers, so many existing app users will not yet see the borrowing option in their account.
Customers who are included in the initial rollout can sign up directly within the mobile app if they meet the eligibility rules. Applicants must be at least 18 years old, reside in the United Kingdom and have opened their Revolut bank account more than 30 days ago.
Prospective borrowers can check their eligibility inside the app without affecting their credit history. That initial step uses a soft credit search, which other lenders cannot see when inspecting a borrower's credit report. Submitting a full application uses a hard search, which is recorded on the customer's credit report and visible to other financial institutions. If an application is approved, borrowers should receive the funds in their Revolut account within minutes.
Transition from spending app to licensed UK bank
Revolut is widely known as an everyday spending app and has built a large following among travellers because it allows users to hold and exchange multiple currencies in a single account. Founded in London in 2015 by Nikolay Storonsky and Vlad Yatsenko, the company expanded from foreign exchange cards into budgeting tools, peer-to-peer payments and investment services.
Now that the provider holds a UK banking licence, it is working to transition from a spending app into a full-fat bank. In the United Kingdom, banking licences are regulated by the Prudential Regulation Authority and the Financial Conduct Authority, allowing authorised firms to expand beyond payment services into regulated bank lending.
How Revolut loan rates compare with UK rivals
UK consumers normally apply for personal loans through traditional high-street banks and other established financial providers. Revolut's starting rate of 6.9 per cent on loans between £7,500 and £25,000 is slightly higher than the lowest rates available on the wider market.
According to the financial rates comparison website Moneyfacts, borrowers can secure a representative APR of 5.9 per cent on £7,500 loans repaid over three years with the Automobile Association (AA) and M&S Bank, the financial services division of retailer Marks & Spencer. As with Revolut's pricing, that 5.9 per cent figure is a representative APR offered to at least 51 per cent of applicants, meaning the actual rate an individual receives could differ.
However, Revolut's personal loan rate compares favourably against close digital banking rival Monzo. Monzo, an app-based UK bank also founded in 2015, offers a representative APR of 23 per cent on personal loans of up to £10,000, placing Revolut's headline rate closer to traditional high-street lenders as its phased rollout progresses.
