Different APR rates?!?!?!

CAD_Monkey_2

Hi Everyone,

I'm fairly new to the site so was hoping someone might be able to help me:

I have just applied for a £10000.00 loan over 5 years through moneysupermarket.com and saw that Santander / Alliance & Leicester were offering a rate of 6.3% APR, which saw the monthly repayments at around £193.00 (which is the same amount as the current loan I have with Santander which I have 1 payment left to make). I went through the site to apply for the loan, and it was accepted, but I have now received the paperwork and they are offering me 12.9% APR which takes the monthly payments to £223.00!

My first question is: If the loan was accepted at 6.3% - why can they legally change the APR rate on the paperwork and increase the loan (my credit rating is 'good' according to experian and I haven't missed any payments etc.)??

The second question is:

We need to replace our car, but I didn't want to go over £200/pm. I know the current offer is eligable for 28 days, but is there any option for me to try to get a more reasonable APR rate? I don't want to do too many more searches/applications as I know that can adversely affect my credit score.

Sorry for the long first post, but I'm really hoping that someone can help me.

Many thanks in advance...

CAD Monkey

chalkie99

The Money Supermarket site makes money from commissions from it's advertisers, they are not actually offering or processing the loans and the 6.3 rate you have seen is just the "representative" rate.

That is only available to 51% of applications actually accepted, so in reality far less than half of all applicants.

All lenders have their own scoring methods but I suspect your loan was subject to paperwork being reviewed and not actually confirmed as 6.3 initially.

CAD_Monkey_2

Thanks Chalkie,

The 6.3% rate was actually confirmed whilst on the Santander site, and so that's the bit I can't understand. The monthly rate was confirmed as £193 when I then went further with the application on that site. That was the figure that was accepted, so I can't understand how or why they change the APR rate before sending out the paperwork

Apples2

It just means they accepted you "in principle" at 6.3%.
It isn't until they get all your paperwork through that they conduct the full search, which obviously gave them cause for concern.

The 6.3% was the figure you would have received had you passed their searching/acceptance criteria with full marks, which you didn't, hence the increase.

It is annoying but no lender will divulge the criteria until they have conducted the full search, which hits your credit file.

[Deleted User]

at the end of the day 12.9% aint bad atm,if you want to keep the repayments below £200 then see if you can borrow less from them and buy a cheaper car,the rate should be good for loans over 7.5k

Cash_Flow

woodbine wrote: »

at the end of the day 12.9% aint bad atm,if you want to keep the repayments below £200 then see if you can borrow less from them and buy a cheaper car,the rate should be good for loans over 7.5k

Whilst the rate may not be that bad the OP will pay a lot more interest.

12,000@6.9%/60mths = £2,222.92 in interest

12,000@12.9/60mths = ££4,345.38 in interest

Shop around OP what about your bank or some 0% purchase credit cards.

somethingcorporate

Do bear in mind what you will pay overall, focussing on the amount per month means you can be blind-sided by the overall interest cost (a common tactic used in car sales).

CHR15

somethingcorporate wrote: »

Do bear in mind what you will pay overall, focussing on the amount per month means you can be blind-sided by the overall interest cost (a common tactic used in car sales).

And also why people collapse in a financial meltdown after taking a consolidation loan (with that "simple" monthly repayment).

somethingcorporate

CHR15 wrote: »

And also why people collapse in a financial meltdown after taking a consolidation loan (with that "simple" monthly repayment).

I really do not get that, why do people think 1 payment is better than a few? Unless you are refinancing to a lower rate of course.

opinions4u

somethingcorporate wrote: »

I really do not get that, why do people think 1 payment is better than a few? Unless you are refinancing to a lower rate of course.

A lower payment that's easier to manage can dig people out of a hole, even if it's usually achieved by a longer term.

The problem is many don't change their underlying spending habit and the debts get higher, reconsolidated and repayment terms extended further.

Then the customer posts an irate view on here about how they've always been good for credit before and don't understand why the evil lender has declined them.

A bit like Greece.

logie48

This same situation happened to me.

Would you be able to lower the APR to the advertised rate if you gave them a call?