Recommend to potential buyers: yes

Full review
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The first section of this opinion relates to a personal loan that I arranged some months ago through Cahoot.com. The second section relates to the Cahoot Visa Card.

1. THE LOAN

Anyone having an idle look through my opinions may notice that I seem to be in the market for a new car, possibly an import.

Unlike going to a UK dealer, who may have all kinds of finance packages, ranging from interest-free credit (on cars they want to shift!) to more normal HP arrangements and “balloon payment” schemes, importers are going to want MONEY.

This leaves most people with two choices, save up for it, or borrow money elsewhere.

It was whilst perusing the icebergcars.com site that I followed their “Finance Partners” link, which led me to www.cahoot.com, an on-line subsidiary of Abbey National plc.

So, although I still haven’t decided what to buy and who to buy it from, I set the loan up. Under normal circumstances, this would be a silly thing to do, since the repayments would start straightaway. Not so with Cahoot – with them, all I have done is set up a loan account with the money still sitting there, costing me nothing. Unlike HP, this is more like a bank account with zero balance, and an agreed overdraft facility. Therefore, if you’re not overdrawn, it costs nowt!

SETTING THE LOAN UP

This was relatively simple to set up over the internet, requiring such details as income, level of existing debt and personal details. In a way, I was glad that they turned down my initial request for £11,000, in favour of £8,000. This does at least show that they take your details into account before making a decision, and aren’t prepared to follow the credit card route of “up to your limit? Please, have some more limit!”

OK, I know there isn’t a little man sitting there approving this stuff. - it’s more likely to be some mathematical algorithm running in the background, but all the same, it was interesting to see this is action, as this is the first loan I have asked for since becoming a “pensioner”, on somewhat less money than before. One plus point though. Being on an index-linked pension from a large employer meant I didn’t have to shell out for redundancy insurance. After all, if I haven’t got a job....

I purposely didn't make a an application based on combined incomes, since we could probably have raised a 2nd mortgage!

Of course, certain items need a physical signature, like the credit agreement, so the account can’t be used until this is returned with a couple of “proofs of address” – gas bills etc.

You then get an e-mail to confirm that the account is ready for use.

USING THE ACCOUNT

You log on through a three-line sequence, ID, password and the last of which rotates between “Special Date”, “Mother’s Maiden Name” etc – I’m always tempted to put Marian there! Yeah, yeah, I know, and I’m Friar Tuck!

Having already nominated a current account to transfer money TO, kicking the loan off is easy. Just input the amount wanted up to the maximum amount agreed and confirm where it’s to go.

A minimum payment of the greater of £50 or 1.75% of the balance is taken via Direct Debit (D/D) every month FROM your nominated account. You can opt to make a larger regualr direct debit payment on line, nad even more flexibly, thanks to the fact that the loan account has a normal sort code and account number, you can also opt to add to this amount by normal bank transfer, thereby shortening the term of the loan.

If you left it to the minimum automated D/D, it would take 13 years to pay off the loan*, even at their very reasonable APR of 8%.(variable) – not recommended for a car loan, since the purchase may be recycled as a “patio set and Tesco plastic bags” by then! However, at this APR, this is streets ahead of all those day-time TV ads exorting you to "reconsolidate" credit card debt.

*One of those fascinatingly-depressing facts that you can model with MS Excel!

Having previously chosen your statement date, the D/D will be taken 15 days later, and any extra payments made will reflect in the reduced D/D next month.

CONCLUSION

This has most of the flexibility of a credit card without the punishing APR.

It is easy to set up, and the loan term can be shortened to suit your financial purposes.

Partly redeemed loans can be re-borrowed up to the agreed amount, so this account could be yours for life, always there in the background to meet life’s little emergencies head on.

The more you pay off, the less it costs, with no early redemption penalties.

Surely, this really is our flexible friend.

2. NOW FOR THAT CREDIT CARD

Having sung the praises of Cahoot's responsible attitude to limiting loans to unknown customers, I was a trifle perplexed to be offered a credit card three months into the life of the loan. Guess what - the credit limit was for £3000, exactly the amount that they had kept me short in the first place. As our American cousins put it, go figure.

This card had two main advantages over my existing Natwest Mastercard. Its interest rate was approximately half that of the Natwest offering, being the same as the loan, i.e. 7% APR, AND, if I signed up for a balance transfer from the Natwest card, I would get a welcome present of up to £75 creditted to the card.

It just so happened that my Natwest card had about £3000 outstanding (having bought the rest of the car with it!), so I applied to transfer it. Lo and behold I now owe Cahoot £2925 (after the welcome gift. You can view the account details in the same way as for the loan. You can opt just to have only the minimum amount deducted every month, or adjust the payment to suit your circumstances all from your PC.