Loan Application Insider Info

orcho

Hi

I have recently applied for the M&S loan that is mentioned on this site at 6.1% APR (subject to checks, etc...). I applied meeting what I believed were all the requirements and got a letter this morning with new conditions of 11.4% (!). I thought this a little odd so I went on Nationwide's online application (principle agreement before credit checking so as to not affect my credit score) and I got back an APR of 12.4% instead of the advertised 6.4%. As the Nationwide application gave me a similar result to the M&S one WITHOUT a credit check I think there must be something in my details that are causing this increased APR. What I have narrowed it down to is:

1. I have credit card limits totalling around £12k on credit cards, however, I only actually owe a total of £700 on them. Do I have too much unused credit and should look to cancel some cards/reduce the limit on them and then look to reapply?

2. I have moved jobs (back-to-back) and have only been in my current position for 3 months. Will I have better luck contacting the loan provider directly and applying in full with employment history?

Any advice on securing the loan would be fantastic.

Orcho

Tixy

You might just not meet their target customer profile. There doesn't have to be anything particularly wrong for you to get a higher rate than the advertised representative rate.
That said your short time in your current position could well be seen as a negative.

Certainly some people seem to manage to get mYBE 1% of so knocked off by calling & appealing to the loan company - you could try that with M&S.

Nationwide does do a credit check - they see your credit file, they just choose to only leave a quote search not a credit application search.

BoGoF

You do realise only 51% of applicants need to be given that rate for it to be advertised as 'typical APR'

With regards your other points

1) You have a potential exposure to £12k plus of debts plus the new loan so that will be a factor. You haven't said how much you applied for or what your income is but when your potential debt to income ratio hits 40% you are more likely to be considered a risk.

2) Your short period in that job would also be a negative. I don't see what would be gained applying direct tbh.

orcho

Thanks, Tixy.

So if there is something 'they' dont like in the credit file do they tend to just decline? or will they increase in APR as they see fit? or will the increase purely be as a result of my customer profile? Im trying to gauge whether it's worth continuing the application process but feel a little bit like the proverbial 'censored' in the wind.

orcho

Thanks, BoGoF.

No I didnt realise that.....but I do now, hence the post.

That seems to suggest loans are only available to people who have been in a particular job for a longer period of time. It's maybe something they should put in their extensive list of terms and conditions before wasting people's time applying in the first place I guess.

Tixy

Well they still offered you a loan - so they wouldn't see it as wasting your time. and its not a required condition that you have to be in your job for a set amount of time which is why its not in the T&Cs, however it could well be that they consider you a higer risk because of this and so have offered a higher rate loan.

The APR reflects the risk they perceive as well as being weighted for customers who fit their preferred profile.

BoGoF

As Tixy has said it wasn't a decline but other factors determined you were a slighly higher risk than the 'perfect' applicant. What the perfect applicant is we'll never know.

Perhaps you should look at closing down some of the unused cards to reduce your available credit although some have argued this has no bearing on any applications but I remain unconvinced of this argument - would you lend someone £5000 if they had £12000 debt at their fingertips?

orcho

Thanks both for your useful information. I'll absorb and think of my next move.

Thanks