The new kid on the online lending block, Koyo is a UK lender looking to provide loans to those with limited credit history.
Koyo personal loans
- Borrow from £1,000 to £5,000
- Decision within 1 working day
- Apply in just 3 minutes, without affecting your credit score
Representative example: Borrow £3,000 over 24 months at a rate of 20% p.a. (fixed). Representative APR 28% and total payable £3,840.74 in 23 monthly payments of £160.04 and a final payment of £159.82.
What is Koyo?
Koyo claims to be the UK’s first Open Banking-based online consumer lender. It’s targeting the more than six million borrowers with little to no credit history who are looking to take out a loan.
How does it work?
Most lenders require that you have good credit history before they’ll approve you for a personal loan, which means it can be difficult to get finance if you’ve never had a chance to build your credit score. This may be because you’ve just moved to the UK, or because you’re still young and have never taken out a credit product before.
Koyo aims to provide personal loans to those with limited credit history, but without the high fees and interest often charged by other traditional lenders. While it has yet to release rate details, Koyo expects its representative APR to be around 35%, and will not charge any late fees, early repayment fees or loan origination fees.
When you apply for a personal loan with Koyo, you’ll need to complete an open banking application, and this data is then used to determine your risk level as a borrower. Where other lenders use your credit history to determine your risk as a borrower, Koyo will use your Open Banking data.
What is Open Banking?
Open Banking is the name given to changes to the financial services industry that makes it easier for you to share your banking and financial data with UK banks and providers. This includes your everyday spending and saving. Open Banking aims to improve competition and innovation in the banking sector, and help you get a better deal on financial products.
Is Koyo right for me?
Koyo offers personal loans for those who don’t have a detailed credit history. This may include:
- People who are new to the UK
- Students or young people
- Customers with no credit history
Pros and cons
- Available to those with no credit history
- Uses Open Banking to determine borrowing level
- Apply and manage online
- No fees
- Still need banking history to apply
- Rates and fees not yet available
What are my other options?
If you have little to no credit history, you’re unlikely to be approved for a personal loan with a bank or other traditional lender. You could consider a short-term loan, though this is the most expensive form of borrowing and should only be used as a last resort.
If you’re looking to build your credit history, you may want to consider the following:
- LOQBOX. LOQBOX offers a unique financial product that lets you make regular direct debit payments into an account, but treats them like loan repayments. This means that each deposit helps build your credit score, which then means you may be more likely to be approved for a regular personal loan in future.
- Credit builder credit card. This is a specific type of credit card that is designed to help customers build or improve their credit score. By showing that you can manage and repay a credit account, you can prove to other lenders that you’re suitable for a loan.
Frequently asked questions
Read more on this topic
free2 loans review free2 claims to provide "free thinking finance", offering unsecured personal loans specifically designed for over 55s.
Future Finance student loans Future Finance offers loans for undergraduate and postgraduate students in the UK. See how they compare here.
Lifestyle Loans personal loans review You can apply for a Lifestyle unsecured or guarantor personal loan for up to £7,500, with same-day approval and funding.
Coronavirus: Is now a good time to pay off my debts? Many Brits are saving more than ever during lockdown, so is now a good time to pay off your existing debts?
Varooma logbook loans Varooma can offer fast, straightforward loans that use your vehicle as security.
Methodology for personal loan ratings You’ll find customer satisfaction star ratings on some of our personal loans provider reviews. Here’s how we came up with them.
LOQBOX advises customers to check their financial accounts following recent cyber attack Credit-building company LOQBOX was the target of a cyber attack on 20 February, in which customers' personal information is likely to have been compromised.
Debt statistics How far in the red is the UK We explore the latest debt statistics for both the government and individuals in the UK.
TSB announces new short term loans – but will they be worth it? TSB will offer short term loans for customers looking to avoid expensive overdrafts or payday loans.
Azure Money personal loans A bad credit provider that only works with brokers, Azure Money matches the needs of a specific set of customers.