Loan rate of 19.9% - too high?

weehobbit

I just applied for my fourth loan with the Clydesdale - I took the first one out in 2001 and have taken out subsequent ones, increasing my monthly repayments and extending the repayment period to free up funds.

I have had an account with them for about 13 years, haven't had any missed loan repayments and my credit rating is good.

My last loan in July 2006 was for £5,000 over 5 years, monthly repayments of £124 (PPI was £1,322.91), 8.9%

I had to insist (rather forcefully) that I would arrange my own PPI this time, and the figures they have given me are:

£5079 loan over 5 years, £129.90 monthly repayments (without their PPI), 19.9%

This seems a bit excessive to me, I know it's not exactly a lending environment at the moment, but I also don't want to try somewhere else and complete another application with the same result. Extremely frustrated.

Any help most gratefully received!

CLAPTON

Treat it as a wake up call and start to question why you are reducing your standard of living by paying out all this interest.

You're only half way through the last loan (5,000 costing you 7,440 ) and you want a new 5,000 loan.

A bit like buy £100 worth of groceries at Tescos.. then when it's time to pay you insist of paying £150 instead.

Dekazer

That does seem awfully high. Have you considered that they might have offered that rate because they see you as a high risk because of your borrowing habits? The PPI issue might be a red herring.

As the rate is so dreadfully high I would personally avoid it. As CLAPTON says, have you carefully considered whether you need this loan? Have you posted a SOA to see where you could cut down spending instead of borrowing more?

It is absolutely possible to get good loans at the moment, if you shop around and are judged to be a good risk. As you've not been offered a good rate, maybe it is time to reassess your needs and capacity to save!

weehobbit

CLAPTON wrote: »

Treat it as a wake up call and start to question why you are reducing your standard of living by paying out all this interest.

You're only half way through the last loan (5,000 costing you 7,440 ) and you want a new 5,000 loan.

A bit like buy £100 worth of groceries at Tescos.. then when it's time to pay you insist of paying £150 instead.

Whoa there tiger!

You have no idea of my personal circumstances. Yes, I currently have around £3k outstanding on a loan for which I pay a ridiculous PPI. I need to get a car and I am looking at various options for borrowing. This is one of the options, but I don't really want to pay out all this interest, so I was looking for some advice to make a properly informed decision. Rather than making numerous applications which will show up on my credit report, I thought it best to do some research, so if anyone has any advice rather than criticism I would appreciate it.

Cheers

Dekazer

I don't think people here are terribly judgemental, just very cautious about making bad financial decisions - we're money savers!

Seriously, have you looked into really cheap cars? We bought a 15 year old car for £450 a couple of months ago - it is running at about 50-60 mpg and had a whole year's MOT on it! You could put something of that price on a credit card - have you looked into deals on those?

Oh, and looking on other forums, avoid YES and Welcome like the plague!!

Rafter

The profit margins on PPI were so high that clydesdale were probably earning the equivalent of 25% in interest on your last loan, so 19.9% is probably a come down for them!

However, given you have a good payment record and the amounts involved you should be able to do better.

Suggest you do a loan search on moneysupermarket and see what comes up.

Probably best to say you want the money to buy a used car rather than for debt consolidation though.

If you get declined, as you say, don't keep applying and ignore any referral to welcome or yes.

Have you thought about trying your own bank too? Although apply online rather than in branch and not via online banking but via their public websites.

Good luck

R.

ILW

Could just save up and buy a car. Save you a fortune over the medium term.

CLAPTON

weehobbit wrote: »

Whoa there tiger!

You have no idea of my personal circumstances. Yes, I currently have around £3k outstanding on a loan for which I pay a ridiculous PPI. I need to get a car and I am looking at various options for borrowing. This is one of the options, but I don't really want to pay out all this interest, so I was looking for some advice to make a properly informed decision. Rather than making numerous applications which will show up on my credit report, I thought it best to do some research, so if anyone has any advice rather than criticism I would appreciate it.

Cheers

I only know your circumstances from the information you provided...

-you said you have had loans since 2001
-that you were only half way through the last loan
-I make no criticism but only a suggestion that you should consider why you need/want to keep borrowing money and paying interest... which self-evidently makes you poorer.
-if you can break the cycle of borrowing and hence not being able/willing to save but instead start savings then spending, you will have a better and richer lifestyle.

It is for you to reject or accept suggestions as you see fit.