Research from Saga Money has found that potential borrowers believe the UK loan market is not fit for purpose.

The firm, which specialises in providing financial services to the older generation, argues the practice of offering teaser rates to tempt people into applying for a loan, only to be hit with a much higher rate on application, is rife in the market and is unfair to consumers.

The average of the top 10 lowest advertised rates on the market suggest loans are available with an APR of as little as 3.23%, but typically applicants have told Saga that they are more likely to be offered an APR a little over 8%.

There is strong demand amongst the over 50s for personal loans. One in five over 50s have applied for a loan in the last three years; demand is particularly prevalent amongst people in their 50s, with 30% saying they have applied for a loan, however this age group is not currently served well by lenders who are not in tune with the changing needs of todays over 50s, Saga claims.

It argues that such firms often apply inflexible acceptance criteria, which means that people who are perfectly able to pay off a loan are not offered one, simply because of their age or the amount they earn on a pay slip, regardless of how much income they might have from other sources. People are working longer, often reducing their hours rather than stopping altogether, and so people are continuing to earn a healthy income later in life through a combination of wages, pension and investment income. Yet many providers apply an arbitrary age limit on to whom they are willing to lend money.

Following research with its customers, Saga Money is launching a loan with a single rate for all, whether they want to borrow £1,000 or £25,000.

Nici Audhlam-Gardiner, managing director, Saga Money, said: “Our customers have told us they have a clear need for borrowing later in life, whether that is for home improvements or to pay for children’s education, and they are finding it frustrating to be turned down because of their age or offered rates much higher than the one they applied for.

“These are often people with a pension or investment income or part time earnings who are able to cope well with loan repayments, but find themselves shut out of the market, because only their pay slip is being taken in to account.

“It is time the market changed with evolving lifestyles, which is why we are offering a one-rate-suits-all proposition, which will take into account the wide variety of income sources people have later in life and also offers flexible repayment options, to help keep track with life’s ups and downs.”