Newbie Loan Advice Please!!! - APR!

kelzbelz_04

Hello fellow moneysavers!

I wondered if anyone could offer me some advice about loan APR.

My partner and I are looking to take out an unsecured loan for a decent interest rate (as far as they go!) to consolidate absolutely everything we owe, including an outstanding loan he already has.

We shopped about, and looked on here, and went for the cheapest APR loan we could find, which was Tesco at 8.4%. We are pretty money savvy and know that only about half are going to get the advertised rate.

He had it all agreed in principal, on the basis he provides some bank statements etc, which is great, but they have offered 11.1% APR. This takes the repayments from £265 on the basis of the APR being 8.4% to £291 per month on what they have offered - 11.1%.

This is a bit of a pain! His credit etc etc is excellent, so I guess it was just the luck of the draw on what APR they offered... (??) ...

But now we are unsure whether to:

1. Reject it and shop around, hoping for a lower rate? (would this have a negative impact on his credit rating etc? - I presume it would be extremely un-sensible to do anything for at least a month or so, given theyve probably left their mark on his credit file.....)

2. Accept it and pay a bit more per month in interest (although bearing in mind that this is to be a fairly long term commitment unfortunately!!!)

I wondered if anyone had any opinions on this?? :j

I know loans arent ideal .... but it would make things easier and waaay more manageable for us! But im slightly gutted we didnt get offered the lower rate!!! :think: I guess it could be worse!!!!!!!

Any advice would be amazing!

Take Care All,

Kelly x :A

Tixy

Its not the luck of the draw what APR they offer - its based on their risk assessment of him and his financial circumstances and whether he fits the preferred customer profile.

How much are you talking about for the loan?

Are all your other existing debts higher than 11.1%?

I'd say a 11.1% rate isn't bad, especially if you are struggling financially. Maybe he could try either nationwide or zopa for an application to see what rates they would offer (they do soft searches which are not visible to other lenders/potential lenders on your file).

kelzbelz_04

Aw thanks Tixy thats interesting ....

Ok lets be upfront ... its for £17,000. :eek:

eeek its such a lot of money ......

Well his current loan that I mentioned is with Lloyds TSB - he got it to cover a career development type thing about 4 years ago .... The rate of the loan is 7.4%, which I know doesnt seem to really exist anymore! So the new loan would pay that off - old loan = 7.4%, new loan = 11% - I can see that this is not ideal at all ..... so we thought perhaps if he kept the original one, and just took out another loan for the rest...but then the 2 x monthly payments would be massive put togehter...

The rest is for various things ....

- He is newly self employed, and has been hit with a massive tax bill (well to us it seems massive!) of 4500 which they want like.....soon!

Then the remainder would be for our wedding - (I know from reading through the threads and stuff about weddings that borrowing for your wedding is stupid - unfortunately, when we booked it a long time ago, we hoped that I'd be in a better position thean I am now! - I just finished uni, got a social work degree, hoped I might walk into a job, but then everyone got cut!!!!! so I am earning waay less than I hoped!!!)

Anyway Im sure you dont want to hear my life story! Haha!

But will nationwide and zopa not mind that he has had a recent search from Tescos? And if not, should we try for both do you think?

Thanks for the advice x x x :money:

LovelyLeeds

I fear for your finacial future, your thread has a 'what are we like' type jovial edge to it.
Going into £17,000 debt to pay a tax bill and wedding is beyond madness, but that's not what you want to hear.

11.1% is a decent rate given the cirucmstances you have given.

Tixy

The rates tend to increase once a loan is over £15k, so I think 11.1% woud be pretty good for that amount.

Worth be trying one of the lenders - maybe nationwide. The existing search could have an impact but still could give it a try.

Even if the wedding venue is booked see if you can cut any other wedding costs - there is a DFW board for weddings with lots of tips!

Is his tax bill definitely correct? has he previously been employed and if so do you know why the bill has arisen?

kelzbelz_04

I knew someone would say that - and I dont blame you to be honest!

But we arent really sure what other options we have - I have just taken a better paid job, but other than cancel the wedding (which we strongly considered, but its almost here!!!) or really really pee off the taxman, I cant see another way...

Correct me if im wrong though!

x x x

mumtomany_2

Have to agree that rate is pretty good!!

I don't think its fair to judge you for what you want the credit for and at least you are trying to be sensible seeing if you can get a better rate you just doesn;t know how to go about it! I have to admit i think paying of the tax bill is importnant but you need to make sure that your husband2b has now started to put aside the money he needs to keep up with his tax in the future or you will find yourself in this position again at his next self assessment!!

LovelyLeeds

kelzbelz_04 wrote: »

but other than cancel the wedding (which we strongly considered, but its almost here!!!)

Have you signed contracts re the wedding expenses? If not then why not consider postponing it? I wouldn't think you'd be able to afford children straight away, so what's the rush?
Definitely don't pee off the taxman - he is your priority expense - all the others can surely wait until you've saved?
Just think what you could save instead of nearly £300 a month going to a loan. ....and are you going to wrack up any more credit for the duration of this £17K loan? Oh my goodness - do you see what I'm saying here? Please re-think.

kelzbelz_04

Tixy,

Well he's a driving instructor and he bought a new car for people to learn in and we (wrongly !!) assumed that he wouldnt need to pay tax for a couple of years due to it being eaten up by buying the car... however, we then learnt (following a big bill!) that this wasnt the case, and that tax relief is one year only!!!! But by the time the bill came through it was a bit late - it was for £4500 and they want it! To be fair the tax people have been lovely - he has £1500 of it, and the other 3000 they were happy to take over the course of a year - I know this sounds silly but £300+ per month on top of everything else is just such a massive panic at the moment! Muchos sleep lost!!!!!!!!!!!!

Blimey, this makes us sound terrible! We;ve just got on the property ladder and what with the wedding, things have just been a bit manic on the money front! And just to clarify (!) our financial state is NOT the result of too many clothes, shoes, luxuries (wish it was!!!!!) - just the current loan, (6k - from 11.5k - getting there!) his existing overdraft (2k) tax bill (4.5k), and wedding (the rest!)!!!!

Lovely Leeds - Yep I see what your saying for sure! Trust me I do! But theres more than £300 p/month now, in loan, tax, overdraft interest, and thats without the wedding! I do see that our situation is far from ideal and I hate the thought of having a loan that big, but I genuinely cant think of any other way ... answers on a postcard!

x x x

ViolaLass

Is the only argument you have for not cancelling or downsizing the wedding the fact that it's almost here? If that's all, then do it. If you really want to get married, just get married and leave the expensive palaver for another time. How much would you be borrowing for the wedding?

Also, even if not moving the loan means you have two large monthly payments (which you don't like), moving it and ending up with one, larger, monthly payment hardly seems sensible.

mumtomany_2

LovelyLeeds wrote: »

I wouldn't think you'd be able to afford children straight away, so what's the rush?

I didn't know you had to be married to have kids!!! lol