Finance for modular training ('ATPL Finance')
 

I've seen a poster at my local flying club for a company called ATPL Finance who offer finance to people who need it for modular flight training courses. anybody heard of them before or had any experience with them??

I'm currently doing ATPLs and am looking into it for my CPL. I presume it's new as I haven't come across them before? Does anyone have any information on them?

Cheers.

Visiting ACS Flight Training
 

Hi,

We have arranged a visit from them next week to our Perth base. Happy to give an update when we get the details.

This is a commercial loan product being offered in a marketing envelope by a bank called Secure Trust Bank PLC in Solihull West Midlands. As a merchant bank they seem to specialize in the sub-prime lending market. This product is basically an unsecured loan with a lending ceiling of £15,000. If you strip away the marketing garnish, it is an unsecured loan with an APR of 10% and additional charges that they have sought to exclude from the APR figure. The APR figure appears to only be a representative figure, so presumably it is variable depending on the applicants credit score.

If you go to the parent companies website, they sell unsecured loans with a representative rate of 7.9% APR, so I 'm not sure what makes this one worth 2% more unless they are targeting it a lower credit score level. Unsecured lending at this level is available from other merchant banks from around 5.9% subject to status.

The loans are wrapped as a vehicle for subscribing FTO's to facilitate their sales. This is much the same as buying any other product on credit. You can apply for the tied product on the specified terms, or you can seek out your own provider on a range of competitive terms.

I had a glance over the T&C's and was a little concerned that the product seemed to tie you to one provider, which would obviously be attractive for the schools selling the product. I am not so sure this would necessary be in the interests of the purchaser unless they were confident in their choice and in what they were signing up to.

Just perused their website as I am looking at finance options for my MEIR. I don't have much of a credit history or anything to secure a loan to. :ugh:

Seems like you do need to sign up to a school but it does say if the school goes bust your money is safe and can be transferred to a different school. There is also a safeguard if you lose your medical (please no!). Has anyone had any experience with them? How did the meeting go with them Flystrathclyde?

I still don't see how this is any different from any other loan?

I got mine through Tesco at 4.8%, a fair bit better than the 9.95% being offered on this site. Just because it's got ATPL written at the top, doesn't make it any different from any other financial product, just like calling something a pay day loan doesn't mean it's not a rip off.

True, but it does mean you're tied to one school, so if you're not getting on well there you're stuck, as it seems this loan company pays the money direct to the school, so you never actually see it. When I did my IR I took a loan, the money was then in my bank account. At the end of each flying day I settled up with the school but at all times the rest of the funds were in my account giving me the power, and knowledge of the balance.

There are numerous threads and posts on this site warning of the dangers of paying up front, but paying upfront through a finance company where you never actually see any of the funds seems like a difficult place to be, I'd rather shop around for a loan and have more control.

I think RTN11 addresses the point quite succinctly. This loan does appear to lock you in to the one provider (unless they go bust or you lose your medical.) That raises the first red flag. It is also "offered" at a rate nearly twice that of the best unsecured loans on the market. However that needs to be balanced against the creditworthiness of the applicant. Even so, it is only a "representative" rate, so presumably the loan rate (if offered at all) also depends on the applicants credit score?

The loan does restore some of the "section 75" protections that a credit card purchase might ordinarily do. However any other loan where more than £100 was paid by credit card, would likely restore this safeguard.

Flight training can often result in a situation where the student may be unhappy with the provider (for any number of reasonable or unreasonable factors,) it should be a concern if the loan contract ties them into only one school, or possibly another school operating the same scheme.

It may be an entirely suitable vehicle for some people. In some cases it may also prove to be a competitive rate in their personal circumstances. However (and rather like store gift vouchers,) it appears to do little that the untied cash provision of any other unsecured loan wouldn't do, with the latter seemingly providing a wider range of flexibility and options.

caveat emptor!

Yep, they certainly did.

I originally had a loan from them at around 5.8% APR, paid around half of this off then contacted them to borrow more and consolidate some other stuff, and they offered me £15,000 at 4.8% APR. I couldn't find better on the market, so basically bit their hand off.

For the original loan, just a credit check, no security or evidence of anything. I've never missed a payment in my life, so they seem happy for me to borrow more, although £15,000 is their limit for an unsecured loan.

Quite a few providers have rates similar to this. However a point to bear in mind generally, is that these rates require a squeaky clean credit history with a score to match. That also applies to anyone with a financial association to the primary applicant. Mortgage rates (secured loans) are typically running at variable margins of 3.5% above base rates, with promotional fixed rates as low as 2%. As with any rate, the credit score is usually the determining factor.

Another point to be aware of, is that a quote doesn't constitute an offer It is provisional and dependent. An application needs to be made before the terms (including rate) are offered (or not.) Any credit application (whether accepted or not) leaves a footprint on your credit history which is likely to have a short term negative effect on an individuals credit score.

I recently got a £15K loan through HSBC at 4.9% to complete my MEIR. I earn an average salary and neither of my parents own a home to secure it to.

The key thing is to sensibly build your credit score - you can't get a good score until you 'borrow' money and then re-pay. The quickest way? Apply for a credit card through your bank. Start off with a £500 credit limit, put your shopping and your petrol through on it, pay it off in full at the end of the month and repeat.

The quicker you have a decent credit score the easier everything becomes, I'd say it's pretty essential in this day and age in order to not get ripped-off with loans, mortgages etc.

P.S. If you try one credit card application and get rejected, do not go around trying others for at least a week. Each application will make a mark on your credit score, if you make too many attempts in a short space of time then it doesn't look good.

This is the key I think. I hear too many people saying their parents won't let them get a credit card, but then later in life they have no credit history when they want a proper loan.

I've had at least two credit cards since I was 18, but as I say I've never missed a payment, never gone over the limit, so I guess when I apply for a loan they have no problem with 4.8% APR, as I have a proven history as a security. If you're a total unknown, or have a black mark, perhaps 9.5% is the best offer you'll get.

Is it the amount of transactions through the credit card or the magnitude of the transactions that counts?

I've only used my credit card 2 or 3 times, but in both cases it was a couple of thousand £. I paid everything off and never missed a payment. So is that enough for a bank to issue an unsecured loan or the more transactions the better?

And similarly, am I right in saying the bank will not give out any loan if you have anything to pay off on a credit card?

And, what if you have a job offer but need to fund a TR? Would that increase the amount you could borrow (unsecured I mean)?

Sorry, as you can tell, I am new to this.

My undertanding is that any application or use of credit leaves a footprint on your credit score. So if you apply for and refused a loan, it will have a negative effect. I also hear that any application for a "pay day" loan (1000s of % apr) has a negative effect.

Not necessarily. When offering you a loan, the bank looks at two things, firstly your credit score which allows them to assess whether or not you are a risk to give an unsecured loan to, and then they look at their responsible lending criteria. This means that in their eyes you are able to afford to repay the loan, otherwise it would be irresponsible to give you a loan where you cannot afford the monthly repayment and still afford to live. Let say their criteria is that you need £900 a month just to live, you have credit card debt with monthly repayments at £100, and you earn say £1200, they would only offer you a loan that fitted that spare £200 that they have assessed you have. This would then dictate the amount of money you could borrow, and the term of the loan.

This is where the bank's responsible lending criteria gets very annoying. Generally they assess the amount you can borrow based on your last three months of earnings, to assess whether you can afford repayments. Obviously in the case of a paid type rating you would hope that it would lead to an almost immediate increase in earnings (say stepping up from a flight instructor earning £15k a year to an airline earning £30k a year). The banks generally don't see it this way, and only look at your last three months, then tell you that you can't afford the loan, or make you spread it over 5 years instead of three which lowers the monthly payments but increases the interest paid.

Also remember anything like old mobile phone contracts, store cards, car hire-purchase schemes etc can all have an impact. Even paying monthly for your car insurance you are effectively in debt to the insurer until the end of the insurance term. If you have any loose ends, tie them up and get things paid off.

Whilst I'm no financial expert, I would say that it's neither. Quite simply, I think that you just have to prove your ability to spend within your limits, and pay-up again at the end of the month. Whether you're earning £15K a year and able to stay within your £500 credit limit, or earning £100K a year and able to stay within your £10,000 credit limit, the general idea is that you can spend responsibly and pay on-time.

Obviously your annual salary and employment prospects will also have a bearing on how much the bank is willing to lend, there should be some kind of happy-medium where they can judge your risk (i.e. credit score) and ability to re-pay (i.e. your salary) to therefore decide how much they can possibly lend under which terms.

Is there any way I could check my "credit score"? Or does it vary from bank-to-bank?


RTN11, I thought you said you obtained a loan without them checking your earnings? Reason I ask is 1) because, after completing the fATPL, I wouldn't have worked for 3 months (making it look like I earn zero) and 2) because it's really the TR that worries me as I've been saving up for a long while to cover all the fATPL costs and will not need a loan for that anyway.

And, if say they do take into account the earnings over the past 3 months... is it just the official transactions from your employer that count? For example I work in a removals company and in tips, I might end up having an extra £200 each month, and plus my hours vary so greatly with each week that on some weeks my wages are over £400 and on some less than £200. How would they look at it?

Do they look at other payments you make into your account? For example, if you have relatives that could supply you with x-amount a week, do they take that into account or it's strictly what you earn that counts?

Big thank for the info btw :ok:

Well, the bank I have all my accounts with would only offer me 9% APR, and no other bank would look at me without me having banked with them for three months or having 3 months of proven earnings (which I didn't have as a flight instructor)

Tesco never actually asked for proof of any earnings, just as long as I could afford the repayments by their responsible lending criteria. I already had a credit card with them with around a £4,500 limit. Some banks just want you to be an existing customer with a proven history.

I think you can check your credit score once here for free

Experian CreditExpert Tips, Advice & Help on Improving Your Finances

then pay a fee to check it regularly afterwards. I've never used it, as I've never been denied a loan (other than sitting chatting at various banks I don't bank with and them saying they won't loan me a penny unless I bank with them for at least three months first)

Thanks for the info :ok:

So maybe it's worthwhile getting a Tesco account just now so that in future I might be able to ask them for a loan...

I'd certainly look at the bank I would like to do all my business with in the future.

HSBC also offer very good rates, but they won't loan you anything without you banking with them for at least 6 months. I guess by having your business over time they can assess the risk themselves, and then keep their rates low by only lending to safe borrowers. They were offering similar or even better terms to Tesco at the time, but I couldn't wait six months for the money.

Looks like if you’re happy to do modular flying with Aeros (I can highly recommend them from previous experience) and the theory stuff through Pro-Pilot (not sure how good they are) then you might be able to get an unsecured loan:

Finance for modular pilot training now available | Pilot Career News

I don’t know the details but as it’s not secured against property I assume that someone will have to act as guarantor for you to take on loan repayments should you default. You might find that parents or family are more willing to act as guarantor rather than risk their house.

RTN11, another thing about the credit score... if you use a credit card, is it good or bad if you just make a minimum payment? Now I tend to pay everything off almost immediately but there was a time that I was just making minimum payments - haven't missed any but not really sure if that's a bad thing or not.

P.S. I'll get in touch with Tesco soon, thanks for the help :ok:


magicmick, interesting link - they say funding is available for ProPilot students. I'm doing ATPL theory with them right now. It seems a bit silly though - who would take out a loan for £2100? That's the price of the distance learning course.