Advice on APR situation please

Fay

I am a complete newbie to loans so please bare with me

I am having a new car and have applied for a loan for 15k with Northern Rock. I had the quote online for an APR of 5.6% which was fine. Anyway, the paper work has just come through with an APR of 9.9% on...quite a differnce! I'm not very happy about it but I have no idea if this is standard practice as its the first loan I have ever applied for.

What should I do? Do you think its because I don't really have a credit history...never had a loan, no credit or store cards, I do have a mortgage. Why is the APR so different, would I get a better rate from a differnt company and will the fact that I have applied for and been 'granted' this loan affect my chancs of getting another if I decide not to go with this one...actually, can I decide not to go for it?

Any help or advice will be very gratefully received

In_Search_Of_Me

Am no expert but have been stung by Northern Rock in the past (& will be paying for it for years!) who said my credit rating wassnt that good (didnt have the confidence to check it!!) so they gave me 8.5% which I regretfully accepted...I also discovered recently that they "front load" the interest so despite paying thousands I've actually paid off very little of the loan which means that if I do now change to a lower rate elsewhere I will have lost thousands....I would challenge them on this and tell them ou're going to shop around if they refuse to budge...have a look round on some of the sites here as one of them tells you who offers low interest rates but these are dependant on your circumstances/credit rating.

Fay

Thank you...sounds like they might not be the best option then full stop! I think my partner is going to see if he can get another loan with the alliance and leicester as he has had one in the past with them

Stonk

fishface-69 wrote:

Am no expert but have been stung by Northern Rock in the past (& will be paying for it for years!) who said my credit rating wassnt that good (didnt have the confidence to check it!!) so they gave me 8.5% which I regretfully accepted...I also discovered recently that they "front load" the interest so despite paying thousands I've actually paid off very little of the loan which means that if I do now change to a lower rate elsewhere I will have lost thousands....I would challenge them on this and tell them ou're going to shop around if they refuse to budge...have a look round on some of the sites here as one of them tells you who offers low interest rates but these are dependant on your circumstances/credit rating.

To be fair to Northern Rock, "front-loading" is a feature of virtually every loan offered by anyone anywhere. It's just the way amortisation works, and must work, in order to fairly and correctly calculate the interest due. At first, a relatively large portion of your repayment goes towards paying interest, and as time goes a higher and higher proportion of the repayment pays off capital. It is completely fair and not a con, honestly!

Catch_A_Fire

Fay wrote:

I had the quote online for an APR of 5.6% which was fine. Anyway, the paper work has just come through with an APR of 9.9% on...quite a differnce! I'm not very happy about it but I have no idea if this is standard practice as its the first loan I have ever applied for.

What should I do? Do you think its because I don't really have a credit history...never had a loan, no credit or store cards

With (as you say) very little credit history, you're unlikely to be offered typical (headline) APRs on the market leading loans. Try Nationwide or another non-rate-for-risk lender - they offer everyone they accept the same rate (i think it's about 6.7% for Nationwide).

MarkyMarkD

Yep, and they are far less likely to accept you, as is a necessary consequence of a "non-rate-for-risk" lending approach. But try them if you like.