Loan Advice - High APR

Smudge855214

Hi All,

Just some quick advice please.

I'm looking to get a £12,000 loan to consolidate.

I have three credit cards totalling to £7,000 - reckless spending.

Also a loan that has a current settlement figure of £4,481 which I have just payed off today through the sale of my car.

£7,000 will be used for the loan to consolidate. The other £5,000 for a reliable cheaper to run car.

I have a good credit rating - As of today sitting at 437. One late payment back in January 2010 on a credit card. All other payments have been made on time and in full!

I have no mortgage.

A fairly good income for my age 22 of 1800pm.

I today looked at a qoute from nationwide after completing all my details etc - they qouted me:

Loan Amount£12,000.00 Term60 months Loan Interest Amount£7,899.00 Total Amount Payable£19,899.00 APR24.4% Monthly Repayments£331.65
Not a full search, this is just a quick qoute thing nationwide offer. I haven't applied for any loans as of yet so no rejected loans or searches performed.

What can i do to reduce this APR? Everything is all in order on my credit rating.

Also how will a £12,000 loan affect me in the future in regards to a mortgage?

Thanks for all your help in advance, If i've missed anything out I'm sorry, im in a rush.

Many thanks,

Sean.

Tixy

Hi Sean

To be honest I'm suprised you were able to get accepted for a loan at any rate.

With consolidation loans lenders will always assume that this is extra debt on top of the existing debts on your credit file (as they don't know and cannot make you pay off your existing debts with the new loan). So on your credit file at the moment you have £11.5k of debt (as the car loan won't show as paid off yet) and are applying for a further £12k, so potential exposure of £23.5k. Compared to your income thats a lot, and people usually start being turned down for credit once it would take them to credit of more than 50% of their income.

Whats the reason for the consolidation? what are the APRs on the existing cards?

CLAPTON

what APRs are you paying on the CCs; are they more than 24%?

if you have debts of 7k and apply for 12k then a lender will see your total debt as 19k (you may well be intending to pay off the 7k but there is no obligation for your to do so.)

I'm surprised that anyone will lend you that even at 24%

LovelyLeeds

Smudge855214 wrote: »

Hi
Loan Amount£12,000.00 Term60 months Loan Interest Amount£7,899.00 Total Amount Payable£19,899.00 APR24.4% Monthly Repayments£331.65
.

Read and inwardly digest your own post Sean. Do you seriously want to pay that obscene amount of interest? 60 months of total abject misery and all because you think consolidating is the answer. Please, re-think.

Apples2

I would guess if the OP ever did go forward with such a crazy plan, the principle offer would soon turn to a rejection anyway.

bobbingalong123

I consolidated this week with a loan from santander at 12.8%.

Loan for 8.8k to pay off two CCs and the remaining balance on a barclays loan. No probs getting accepted. They actually say in their application DO NOT include repayments in your monthly outgoings that you intend to pay off with this loan. So they obviously don't mind consolidation.

bobbingalong123

Ps - I've they "added" the loan onto my current debt they would have considered I had about 24k debt so quite a bit more than your total as CLAPTON points out.

Apples2

Maybe we've turned a corner and lenders are taking a few more risks than previously.

Nobody will ever know the risk matrix the lenders use to accept/decline applicants so one mans acceptance will still mean another mans decline.

We can only work on the balance of probabilities so the more posts like yours informing the rest that acceptance has been met despite a high level of unsecured debt will help.

There is still not enough evidence to suggest lenders are willingly lending to those with substantial debt to income ratios.

KingElvis

The Nationwide would almost certainly decline that on a full search and score.

bobbingalong123

I never proceeded with nationwide because they pre warn self employed people that you need to be a home owner - which I'm not. My score is 986.