Help with Loan advice

Breezybree

Hi, im quite new to credit but i have just applied for a loan with my bank halifax and have been accepted for an APR of 23.9% the loan amount is for £2700 for payment for a trade in on our current car for something a bit more economical. I was told i'd to pay £70 optional for a courier service to sign the documents etc but as im not in a huge rush so i will let them post the details out and send back.

What i want to know is, is 23.9% APR a good for a loan or should i shop around ? ( i was told because i dont have a great credit rating i should approach my bank first which i did with halifax)

I keep reading that it can be better to apply for credit cards for somethings, would that be the case with a car as we may want to pay it off quicker to save paying more interest but at the same time my partner is self employed and with the recession etc we could end up having to lower our payments.

When i was on the phone about the loan i asked if i could possibly pay back and amount or excess we didnt spend on the car from trading in and they said yes we could but it woulndt lower the montly repayments just the payment period, is that normal and would something like that even be worth doing ?

sorry if these questions seem obvious to some but i dont like going into things without knowing what im getting myself in for as ive been stung with things in the past

any help would be appreictaed thanks in advance

paulmcerlean

As a bank loan, the APR you have is quite poor, however the amount you are asking for is low, but a top scoring candidate likely would have got something around 14-15% on this amount, maybe less.

However an unsecured loan is hard to come by these days, and if you have managed one with your bank on a poor credit rating, I wouldnt shop around as you will likely find only rejection.

Tixy

The halifax representative rate for such a small amount is that apr - so in a way thats good, you are being offered their 'normal' rate.

For a loan of that size I would say its not a bad APR - a quick search of best buys comes up around 18.6% so if your credit isn't great that doesn't seem a bad figure.

Re the credit card - a lot of car sales places will charge you a fee if you pay buy credit card - often a fixed percentage of the amount being put on the card so you would need to factor that it to any calculation.

How long are you taking the loan over? how much do you expect to be able to pay back a month?

Whilst funding it on a 0% credit card would probably be a nice idea it really depends if you are realistically likely to get a credit card with a 0% deal and a high enough credit limit - and that depends on your credit history and your current finances etc.

Re paying back the loan early (or making an overpayment for unused money) its normal that it reduces the term not the monthly payment. You would save a little interest if you did that but may have to pay a small % penalty for the overpayment. Depends on the wording of the agreement. So whether it would be worth paying off any spare would depend on the amount left over and any penalties in the loan agreement.

Any reason you did not find a car first and find out what trade in they would give you to work out how much you needed to borrow first? that would have saved that hassle and the potential that you may have borrowed to much or too little.

Breezybree

Hi thanks for the information, the reason I didnt try and get credit at a car dealer was mainly because i knew i had bad credit and the thought of not getting it was fed by the fact that when i saw a car i liked a few months back at a dealers and finance came up in conversation the guy said it was hard to get credit now and it would be unlikley i would be able to get it with a poor credit rating i was also told by people that my own bank was the best people to ask

the period is over 24 months

Tixy

Breezybree wrote: »

Hi thanks for the information, the reason I didnt try and get credit at a car dealer was mainly because i knew i had bad credit and the thought of not getting it was fed by the fact that when i saw a car i liked a few months back at a dealers and finance came up in conversation the guy said it was hard to get credit now and it would be unlikley i would be able to get it with a poor credit rating i was also told by people that my own bank was the best people to ask

the period is over 24 months

I didn't mean why did you not use credit through the dealer - just that you could have found a car and worked out how much you needed and then applied for a loan with your bank for the correct amount.

Breezybree

oh sorry i have been looking at cars ariound 3500-4000 a focus or astra and they usually range around that price range, i thought there was no point choosing a car untill i had obtained the money and im not really sure how much they are going to offer me trade in on my current car, thats the only reason

Breezybree

when my partner got a loan for our last car we applied for a loan from home and got it through but the cart we had set our hopes on ended up selling and we couldnt find anything as good so had to eat into an overdraft, so this time we thought we would get the loan first then pick the car and pay back any excess really.