Loan Purpose

oleson

Apologies if this has already been covered somewhere in the forum, but my ability to search is pretty poor!

I am looking to take out a loan with Tesco Bank. I have an existing loan with them which has about 18 months left to run. I am concerned that if I inform them I want this loan to consolidate debts, I will be charged a higher interest rate, or be refused altogether.

Am I right in thinking that interest rates can be different depending on what you are using the loan for? If this is the case, what reason could I provide which would enable me to get the lowest interest rate possible?

Thanks in advance for your help!.

[Deleted User]

oleson wrote: »

Am I right in thinking that interest rates can be different depending on what you are using the loan for!.

Not that I've ever heard of. However, it can have a bearing on whether they offer you the loan or not.

ie buying a car= yes/maybe

buying 1000 bottle of alcopops for a party = no

oleson

Ha ha thanks. It wouldn't be for the alcopops...my partying days are over!

I would be using the majority of money to consolidate debts, but in the period that I have the loan I will be changing cars. I was just wondering if buy stating that I would be using the money to buy a car (which wouldn't be completely dishonest), I would potentially get a cheaper interest rate than if I was to use the money to consolidate debts.

[Deleted User]

I doubt it would make a difference to the rate. And I don't think there's much to choose between the two reasons.

poppasmurf_bewdley

oleson wrote: »

Am I right in thinking that interest rates can be different depending on what you are using the loan for? If this is the case, what reason could I provide which would enable me to get the lowest interest rate possible?

NatWest Bank charge more for loans for debt consolidation than they do for other items. I don't know about other banks. That's what my then bank manager told me when I enquired about a consolidation loan through them.