Personal Loans: How to get the UK's cheapest Discussion Area

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Personal Loans: How to get the UK's cheapest article

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avi_3

I was refused a loan by moneyback bank. Reason - I have been on the electoral register for less than 5 years. I believe that is one of the main criteria for the low APR.
If you have a decent dredit history i.e no missed apymetns, etc, i would go with nationwide who have fixed APR regardless of credit history.
Also Egg are now doing a laon for 6.9% - advantage, even if you have £1 extra, you can pay that inot your loan account and save interest.

spencert

Can you help i have recently become a moneysaver and realise i am being daft with my money.
two years ago i couldnt get credit bad history but needed a car , i bought the car for five thousand but had to pay high interest because of my credit.
Interest being 29.9% i know bad.
I know have a good credit score after viewing the experian free mth trial and would like to do something about the finance on my car . My payments are £223.00 a mth and go on till june 2007, i already have two loans one for 5000 with hsbc and one for 6000 with halifax , my only problem is i have just been made redundant from a well paid job but have little bit of savings and my partner gets good wage so will be able to pay a loan but do i refinance or get a loan? and will they except an application even though i have been made redundant.
I know this is long winded and i hope im in right place sorry im a newbie .
Can anyone help

KWoolerton

avi wrote:

I was refused a loan by moneyback bank. Reason - I have been on the electoral register for less than 5 years. I believe that is one of the main criteria for the low APR.
If you have a decent dredit history i.e no missed apymetns, etc, i would go with nationwide who have fixed APR regardless of credit history.
Also Egg are now doing a laon for 6.9% - advantage, even if you have £1 extra, you can pay that inot your loan account and save interest.[Got my loan with Egg, great advice thanks/QUOTE]

Raju

Is it advisable to get the personal loan to make some MONEY? :rolleyes: (like a LOOPHOOLE)

e.g

If I take a loan of £10,000 from moneybackbank.com at the rate of 5.5 APR (current) for 60 Months. I would be paying installments as follows
£190.97 * 60 (months) = £11434.20

Now if I invest £10,000 immediately upon receiving to a high interest rate Saving bank (e.g ICICI UK which as a rate of 5.15). In 5 Years I would be earning (on a compounded interest,

£10,000 @ 5.15% (compoundde interest) * 5 years = 12854.24

So in 5 Years I actually made £12854.24 - £11434.20 = £1420.04 :j

Is there a catch . I can't think , except I would think that anyone with a good Credit history only do this.

savememorecashmartin

moneybackbank seem to offer the best rates but avi you're not the only one they turned down - my wife applied to them for a loan this week and was turned down flat - by Alliance & Leicester (who are behind moneybackbank) who stated the reason her application was declined was that she did not have an account with A&L. She's banked with them for seven years.

Personally, I don't think they actually lend out much, that's how they can offer these fantastically cheap rates. A&L also turned me down without explanation, when I applied for a pers loan a few years back, despite having a good CH and also banking with them for lots of years. I know Martin bigs up some of their current accounts (for good reason) but for the rest, they seem to be a pain in the butt - another building society waving the 'we're a big bank' flag, when clearly they're not.

We went with LloydsTSB in the the end, not quite the cheapest I know but if you have a current account with them and apply online, they put the money STRAIGHT into your account (like within 5 mins!).

So to A&L and moneybackbank, lets go car shopping! :T

Rafter

spencert. You should certainly try between you to get the cost of your car loan down - 30% APR is a very high rate. If you have been made redundant though, your ability to get a loan right now is going to be tough.

Raju. Nice try but with the APR on the loan higher than the savings rate (and before the interest is taxed) it is not possible to make money like this.

Here is why........

If you borrow £10k now and put it in savings it will turn into £12,854.

However, each month you are having to find £191 to repay the loan which you could otherwise be earning interest on?

So, if you had to pay the £191 per month out of your savings each month the amount of interest you earn over 5 years would be less than the amount of interest you pay on your loan.

Unless you can find an investment earning more than 5.5% return after tax, you can't make money this way. And any investment which does earn that much is likely to be risky!

Others. Also got counter offered a bad rate for moneybackbank loan after declining PPI. I don't think Martin should be pushing this product unless they can demonstrate that they really do offer the typical APR to the majority of people who apply and decline the PPI, otherwise they are effectively making the overpriced insurance compulsory and breaching the advertising rules.

R.

pelham9

It is absolutely right to compare loans using the %APR but that is not the whole story.
We must assume in this discussion that the %APR is an expression of interests rates only - compulsary entry fees and the like complicate matters but these are now quite rare.

The %APR is an approximate figure as it is allowed by law to be rounded to one decimal place. So a 5.6%APR represents an contractual interest rate between 5.55 and 5.649...%. The purpose of the %APR is to illustrate amd compare only and it is not in any way the contractual interest rate which you will actually pay.

There are some totally honest lenders out there! These will charge at a rate of 5.6% for 5.6 %APR but the rest will charge up to the highest figure they can get away with ie 5.6499..% and many will maintain that they are charging at 5.6% when they are not.

So if you have 2 lenders advertising 5.6%APR it is as well to do the mathematics and find out exactly what you are paying. You will find those who perpetuate this 'scam' will be very sticky about the way they derive the monthly or daily rates they use from the 5.6% annual rate.

If you find that 5.6%APR actually means 5.649..% then try not to use that lender - thay are not honest and will not deal with you absolutly fairly. The dishonest lenders will be overcharging you £20+ on a £10000 loan over 3 years - not much but a significant extra to their bottom line.

pelham9

I thought it might be interesting to look at the uninsured loans quoted in the article.
I asked the two calculators on the websites for a £10000 loan over 36 months. Unfortunately Cahoot is now quoting 5.8%APR for loans over £5000.

However Moneyback gave instalments of 301.53 an actual rate of 5.541% (5.5%APR)

Cahoot gave instalments of 302.64 an actual rate of 5.8% (5.8%APR)

Interesting? If the qouted %APRs were the same Cahoot would look to be cheaper.

ballynoes

Just been accepted for a Moneyback Loan at 5.5%, cheapest I have ever had. Obviously have a good credit rating, so they do exist. Lots of it depends on luck and when you apply me thinks. Mind you they tried for 15 mins to sell me loan protection, but I kept (politely) refusing. Thought this would put my intrest rate up but no 5.5% all the way through. I could almost make profit on this loan if invested correctly.

Lyndyloo_3

I have been self-employed for the last 13 years and during that time have managed my business extremely well, never needing to borrow money and only ever being overdrawn at the bank for a couple of days.

I have one credit card which has a £10,000 credit limit and a zero balance. I spend up to £1,000 a month on the card and it is paid off in full.

I have just been accepted for a self cert mortgage and been given their preferential rate of 4.99% fixed for 3 years due to my good credit score. The mortgage I am about to take out is less per month than the rent I’ve been paying for the last 7 years.

Being a self cert mortgage I have to put down a 10% deposit. For the flat I am about to purchase that's £25,000. I already have £15,000 of this and needed to raise the additional £10,000.

After checking this website and seeing that Northern Rock had one of the best personal loan rates of 5.6% I contacted them. I also noted from the Northern Rock site that they only required audited accounts if the loan was over £10,000 which this was not. Apart from the hassle of having to provide accounts, being self employed, I keep my expenses at a premium to ensure my tax is kept to a minimum!

Upon applying for the loan I was pleased to be accepted, but was less than happy when I was told the interest rate would be 10.9% almost double the rate advertised. In addition they wanted to see audited accounts and when I queried this fact as the loan was not over £10,000 was told these were required for loans of £10,000.

I have now received a letter of acceptance from them in which again, it clearly states that income confirmation is required for loans “over £10,000” which this loan is not.

Under the circumstances I feel the information on their website is very misleading. I also understand that different rates apply to loans depending on an individuals credit rating, but just how credit worthy do you have to be to get the 5.6% rate?

The young lady who managed my application wasn’t the most pleasant of people to deal with and I found her manner to be less than warm. No doubt she is dealing with a lot of people desperate to borrow money who are lured by their hollow promise of a good loan rate. I’m just thankful I’m not in a desperate situation.

After spending over half an hour of wasted time to be told such a disappointing rate I rang my own bank, First Direct, to see what they could do for me. Within a few minutes I was delighted to be offered the loan at their preferential rate of 7.4%.

Now, thanks to being able to borrow the money from my family, I’ve not had to go down the personal loan route but wanted to have one in place just in case I couldn’t raise the funds.

It’s rare that I have need to write and complain and this is the first post I've ever made on any forum but I do feel strongly that the Northern Rock aren't playing fair. I have written to the Northern Rock to suggest that the least they should do is change the wording on their website and in any documentation to state that confirmation of income is required for loans of £10,000 or over.

It might also be helpful if they could provide a list of the criteria required to receive the ‘elusive’ 5.6% - which no doubt includes; full time employment at director level in a blue chip company; expanding property portfolio and an offshore account in the Bahamas!

It would certainly be interesting to see what proportion of their loan applicants receive the 5.6% rate. I bet that’s one low percentage that the Northern Rock wouldn’t be happy to promote!

So borrowers beware - particularly if you're self employed.

Finally, to Martin and all the MoneySavingExpert crew - thanks for doing such a fantastic job - this site has saved me a fortune over the years.

Lyndyloo x