Meet Levi. He’s 22, recently graduated from university, and has started working for an insurance company. But he’s facing a big problem: he needs a car of his own as his work entails travelling between a number of different sites and he’s struggling to remain punctual. Dependent on Shanks’ Pony and public transport, he has to allow large travelling times to ensure he arrives on time. It’s hard to be productive when you’re stuck on a bus or a train.
The problem is that he’s sure that if he applies for a loan, he’ll be turned down: not only does he have a large student loan, but he admits he wasn’t always wise with his money during his Uni days and overspent, leaving him with additional debts that he’s also repaying. He thinks his creditworthiness is at or close to the “Computer says ‘No’” level.
He began searching online for ways of raising money. His income, he’s sure, would allow him to repay a loan, even if his credit rating precluded him from obtaining one, but he discovered that even asking for a price quote for the amount of borrowing he was looking for would allow a prospective lender to access his credit rating via a credit rating agency. And, as he also discovered, several credit searches occurring within a short space of time signal possible financial stress to lenders.
Initially, Levi thought that the alternative finance sector may be able to help: it had, after all, grown in the wake of the global financial crisis of 2007/8 as a source of borrowing for individuals and SMEs – the very people the banks had become reluctant to lend to. However, the more he researched, the more dispirited he became. Virtually every peer-to-peer lender he found online made it clear that they would require an unblemished credit history. It’s difficult for a 22 year-old university graduate to supply that. You generally need to be a little longer in the tooth to have those credentials.
Then he discovered p2p platform Unbolted with its unique secured asset loans and a door opened in his mind. Like many young men, Levi had entertained dreams of one day becoming a rock star and in fact was an accomplished musician: he’d been playing the guitar since he was 10 years old and was now highly proficient. He also happened to own an iconic Fender American Vintage 65 Stratocaster - his grandparents had bought it for him for his 21st birthday after he’d graduated with an excellent honours degree. It was in mint condition as the demands of his job had left him no time to play.
Excited at the prospect of obtaining a loan without having to go through a credit search, he uploaded a photograph of the beautiful instrument to Unbolted. Our expert partners determined that the guitar would have a resale value on the secondary market sufficient to let us lend Levi the £1,000 he needed for his car. He placed the guitar with Unbolted (via our next day courier service) for safekeeping in secure storage for the ensuing six months. Levi had his money and bought his car without a credit search: we collateralised his guitar as security for the loan.
