Loan question
- Thread starter mushtafa
- Start date
I thought this info might be useful. I once helped write the loan quotation software for a bank. It was back in the mid 2000's now so things might have changed a little. But there are many factors which go into the quote. It's not just your credit rating. But there are calculations made about the type of person you are. e.g. how likely are you to default on the payment, how likely you are to repay it early, how likely you are to refuse the loan at a certain APR and how likely you are to take a loan from a competitor. So if you keep paying loans back early then the next time you take a loan your APR may go up slightly. That's because the company wants to get the most profit from you early in case you pay it back. Loan quotations are actually quite complex. All of these factors were calculated at each APR rate and then the most profitable APR offered to you.
e.g. Between 2.9% and 15% in 0.1% increments all of the above factors (and more - I've forgotten most of them) are taken into account to calculate the profit. Then the APR with the highest profit is chosen at the end of the calculation and offered to you. They did also factor in the likelihood you were to take loan protection insurance but I assume that's no longer allowed.
e.g. Between 2.9% and 15% in 0.1% increments all of the above factors (and more - I've forgotten most of them) are taken into account to calculate the profit. Then the APR with the highest profit is chosen at the end of the calculation and offered to you. They did also factor in the likelihood you were to take loan protection insurance but I assume that's no longer allowed.
It's likely an unsecured loan, you can tell them you're buying a car with it (if they even ask anyways), then go and blow it all on cocaine, as long as you make the payments as scheduled they wont care.
It's a minefield to me. Not sure what to do now. I either except it for what it is at 15% or risk affecting my credit score by looking elsewhere.
My credit was bad around 10 years ago, but it's been on the increase since sorting everything out over 5 years ago. No missed payments on my credit card, no defaults, no CCJ etc.
My credit was bad around 10 years ago, but it's been on the increase since sorting everything out over 5 years ago. No missed payments on my credit card, no defaults, no CCJ etc.
I've checked credit karma and there's been no new hard searches on my file so that's a good thing I suppose. Theres numerous soft searches, but it says that doesn't affect anything.
I agree. I don't want to pay that much to borrow it
I agree. I don't want to pay that much to borrow it
I spoke to someone really helpful at NatWest this evening. He said the higher interest rate of 14.9% is due to not having a loan before and my credit report is relatively simple in regards to borrowing money.
He did explain being able to re-finance the loan in around 6-12 months which should be a lot lower APR. (Assuming I keep up with payments and my credit file doesn't go down).
He did explain being able to re-finance the loan in around 6-12 months which should be a lot lower APR. (Assuming I keep up with payments and my credit file doesn't go down).
Deleted User 298457
Deleted User 298457
Don't listen to him. He is banking on you not doing that and there is no guarantee it will be the case. He will have already taken his commission. And everything he told you is just a guess. He has no idea.
Do you have a credit card?
Soldato
- Joined
- 25 Nov 2007
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Keep driving your existing car until it dies
Caporegime
- Joined
- 21 Jun 2006
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- 38,367
7/10 is bad imo.
You will never get the advertised Apr with that score. You need 9/10 minimum. I'd say 10/10 personally.
They offer the advertised Apr to just over half the people who apply. The other half get much higher and that's where they make their money.
You need to go on money saving expert and bookmark it and read the correspondence section whenever you are doing anything to do with finance or big costs / bills.
https://www.moneysavingexpert.com/loans/
There is a lot of stuff on there. It shouldn't just be a quick 5 minutes of flossing over. It should take you several hours or even days to go through depending on your current level of knowledge and ability to absorb information and process it.
Personally if I were you. I'd just buy a cheap honda civic or a Toyota Corolla. Both cars are pretty much low maintenance and bulletproof and cheap to repair as well as simple to repair.
If your credit is good then the APR should be under 3% on any over £7500 and try to reduce the term to 4yr as that way you will pay even less interest.
Then take it and then make a lump sum over payment and either select to reduce the term further or monthly payment as they normally give you that option.
Then take it and then make a lump sum over payment and either select to reduce the term further or monthly payment as they normally give you that option.