Bank loan - APR & Flat Rate figures...

chuffychops

Hi all, I'm new to the forum so be gentle with me!

I spoke to my bank's 'phone loan' dept last night about a consolidation loan. They rang me as a follow-up call as I was testing the water for a decent-sized loan to cover an ongoing o/draft. I suspect they thought they had scented blood and wanted to move in for the kill!

I was quoted an APR of 7.8% on two terms, 48 & 60 months.

When I asked for the actual interest rate, things got quite frosty and I was told in an increasingly harsh monotone that 'we don't work it on interest rates, it's all done on the APR.' Further prodding resulted in: 'the interest rate will be about 7.5%, but the APR is the figure we work to...'.

I'm told that it's against the law for banks NOT to give the actual interest rate if asked.

Can anyone confirm, or give me any more info on this sticky little bit of detail?

I expect I'm also going to be offered PPI if I have a loan, but as I'm self-employed, surely this isn't an option?

Any suggestions/advice appreciated.

Regards,
CC

zppp

chuffychops wrote: »

Hi all, I'm new to the forum so be gentle with me!

I spoke to my bank's 'phone loan' dept last night about a consolidation loan. They rang me as a follow-up call as I was testing the water for a decent-sized loan to cover an ongoing o/draft. I suspect they thought they had scented blood and wanted to move in for the kill!

I was quoted an APR of 7.8% on two terms, 48 & 60 months.

When I asked for the actual interest rate, things got quite frosty and I was told in an increasingly harsh monotone that 'we don't work it on interest rates, it's all done on the APR.' Further prodding resulted in: 'the interest rate will be about 7.5%, but the APR is the figure we work to...'.

I'm told that it's against the law for banks NOT to give the actual interest rate if asked.

Can anyone confirm, or give me any more info on this sticky little bit of detail?

I expect I'm also going to be offered PPI if I have a loan, but as I'm self-employed, surely this isn't an option?

Any suggestions/advice appreciated.

Regards,
CC

First of all banks are no longer selling PPI on top of loans.

Secondly, the flat rate of the loan tends to be on your loan agreement. I would say the legal requirement is the APR rather than the flat rate, becasue that includes any additional costs for setting up the agreement and compound interest, that a flat rate would not display.

Cash_Flow

chuffychops wrote: »

Hi all, I'm new to the forum so be gentle with me!

I spoke to my bank's 'phone loan' dept last night about a consolidation loan. They rang me as a follow-up call as I was testing the water for a decent-sized loan to cover an ongoing o/draft. I suspect they thought they had scented blood and wanted to move in for the kill!

I was quoted an APR of 7.8% on two terms, 48 & 60 months.

When I asked for the actual interest rate, things got quite frosty and I was told in an increasingly harsh monotone that 'we don't work it on interest rates, it's all done on the APR.' Further prodding resulted in: 'the interest rate will be about 7.5%, but the APR is the figure we work to...'.

I'm told that it's against the law for banks NOT to give the actual interest rate if asked.

Can anyone confirm, or give me any more info on this sticky little bit of detail?

I expect I'm also going to be offered PPI if I have a loan, but as I'm self-employed, surely this isn't an option?

Any suggestions/advice appreciated.

Regards,
CC

What bank is this?

Apples2

I would be VERY careful when receiving call backs.

Phone-Loan dept??

It isn't unheard of for the banks to pass your details onto brokers who charge a fee for nothing.
Be absolutley SURE who you are dealing with before giving out ANY information.

industryinsider2

Apples is right - I've been offered bank declines before, not sure how genuine those offers were, but there are a few companies who get regular mentions on this forum who are well know for buying and selling bank declines. So do be careful.

An APR of 7.5% would equate to a period rate (a monthly charge) of around 0.5% per month. So whatever the outstanding principle (original loan amount) you'll be charged interest which is equivalent to about 0.5%. If you were to borrow £1000 by the time you come to make your first repayment they will be £50 interest added to the amount you owe.

7.5% APR sounds pretty low and would be very surprised if you are able to get yourself a loan at the rate. Bank loans advertised at headline rates more often than not turn into APRs in the low 20s (a period rate of around 1.5%), but that's not too bad in this market. :money:

chuffychops

Cash_Flow wrote: »

What bank is this?

Lloyds. I've been very wary of going to them to sort this out as last time I was approached by them (in a High St branch) to consolidate, they then smirkingly offered me a ridiculous rate which was higher than anywhere else at the time. When questioned, I was told that was the rate, end of.

[Deleted User]

industryinsider2 wrote: »

Apples is right - I've been offered bank declines before, not sure how genuine those offers were, but there are a few companies who get regular mentions on this forum who are well know for buying and selling bank declines. So do be careful.

An APR of 7.5% would equate to a period rate (a monthly charge) of around 0.5% per month. So whatever the outstanding principle (original loan amount) you'll be charged interest which is equivalent to about 0.5%. If you were to borrow £1000 by the time you come to make your first repayment they will be £50 interest added to the amount you owe.

7.5% APR sounds pretty low and would be very surprised if you are able to get yourself a loan at the rate. Bank loans advertised at headline rates more often than not turn into APRs in the low 20s (a period rate of around 1.5%), but that's not too bad in this market. :money:

5% would add £50 to a £1000 loan NOT 0.5%

chuffychops

Apples2 wrote: »

I would be VERY careful when receiving call backs.

Phone-Loan dept??

It isn't unheard of for the banks to pass your details onto brokers who charge a fee for nothing.
Be absolutley SURE who you are dealing with before giving out ANY information.

Mmm, yes I hadn't thought of that - thanks - just assumed that I was talking to their in-house bod in Wales " Personal Loan Banking" was how she described it. Very frosty, as I said. Maybe it's because I wouldn't commit on the loan over the phone...

I wonder, has anyone got any recommendations for a loan provider?

It's a complete jungle out there - all I (maybe) want to do is buy some money at a reasonable rate, but it seems that as soon as you talk to these people about it, they start to circle like sharks... :eek:

I think that come the new year, we'll be having a complete financial review. Maybe change everything - accounts, the works. I think it'll be a lot of work, but then isn't that what banks bank on? That you'll not look else where because it's just too much darn hassle?

Any comments appreciated.

CC

CLAPTON

chuffychops wrote: »

Mmm, yes I hadn't thought of that - thanks - just assumed that I was talking to their in-house bod in Wales " Personal Loan Banking" was how she described it. Very frosty, as I said. Maybe it's because I wouldn't commit on the loan over the phone...

I wonder, has anyone got any recommendations for a loan provider?

It's a complete jungle out there - all I (maybe) want to do is buy some money at a reasonable rate, but it seems that as soon as you talk to these people about it, they start to circle like sharks... :eek:

I think that come the new year, we'll be having a complete financial review. Maybe change everything - accounts, the works. I think it'll be a lot of work, but then isn't that what banks bank on? That you'll not look else where because it's just too much darn hassle?

Any comments appreciated.

CC

this thread, makes no sense
what are the financial facts?

what's the problem?

7.8% APR is a fantastic rate

but what is the problem here?

chuffychops

CLAPTON wrote: »

this thread, makes no sense
what are the financial facts?

what's the problem?

7.8% APR is a fantastic rate

but what is the problem here?

Hey, thanks Clapton. If 7.8% APR is seen as a good rate then the purpose of the post is fulfilled. I personally prefer to have an actual interest rate so I know where I'm starting from, but getting that actual info is like pulling teeth. Yes, I can go to my bank, but I don't neccessarily trust them any further than I could throw 'em. I've been 'up-penced' on agreements in the past by other companies, so have learnt not to trust, hence the general nature of the post.

Specifics are that I probably need around 12k, on 48-60 months, and a deal where I can pay off lumps with no penalty clauses.

Was offered 7.8% APR by my bank which I was told was 7.5% as an interest rate - but I always thought that the APR was approx. twice the interest rate? I'm probably wrong. But that's partly why the initial post... I just wondered what the law stated about denying the actual interest rate to a potential customer?

So, apologies if the post seemed non-directional.

CC

CLAPTON

chuffychops wrote: »

Hey, thanks Clapton. If 7.8% APR is seen as a good rate then the purpose of the post is fulfilled. I personally prefer to have an actual interest rate so I know where I'm starting from, but getting that actual info is like pulling teeth. Yes, I can go to my bank, but I don't neccessarily trust them any further than I could throw 'em. I've been 'up-penced' on agreements in the past by other companies, so have learnt not to trust, hence the general nature of the post.

Specifics are that I probably need around 12k, on 48-60 months, and a deal where I can pay off lumps with no penalty clauses.

Was offered 7.8% APR by my bank which I was told was 7.5% as an interest rate - but I always thought that the APR was approx. twice the interest rate? I'm probably wrong. But that's partly why the initial post... I just wondered what the law stated about denying the actual interest rate to a potential customer?

So, apologies if the post seemed non-directional.

CC

some definitions

the APR is the annual percentage rate and includes the effect of compound interest and MUST be quoted on loans

flat interest rate is only used by car sales as it's approximately half the APR; it has absolutely no status in law and is just a salesman fiddle.

the is no such thing as an 'actual rate' unless you mean the non compounded simple rate

the formual connecting APR and simple rate S is as follows

APR = (1+S/12) ^ 12 - 1
where ^ means 'to the power of'


when comparing diffferent loans then always use the APR


and let me say again an APR of 7.8% is an excellent rate



and as an example a simple rate of 7.5%

works out as an APR of 7.76%