NatWest Loan - APR different than advertised

groovedolphin

I'm a long-standing NatWest current account holder. Unfortunately due to a protracted period of unemployment, which has been over for a while now thankfully, I have a fair bit of debt on my credit card.

I have tried applying for a credit card with an interest-free offer twice, but was turned down both times.

So - I've tried this morning applying online for a personal loan for £16,000 from NatWest. This was agreed in principle. But the application process asks me to agree to a total interest, after 24 months, of £3150.20, at a "Fixed rate of 14.41% a year." The APR is expressed as 15.4%.

However, on the loan calculator on NatWest's site - I can't post a link as a new user, but it can be found easily from Googling NatWest Personal Loan - the advertised APR for the same loan is 11.9% p.a, and the total interest paid at the end of the term is a more palatable £2,441.

Why the discrepancy .. can anyone suggest a reason for that?

Many thanks.

somethingcorporate

The advertised APR is subject to status and only needs to be given to 51% of successful applicants. You will be given a rate appropriate to your circumstances, the higher rate means you are not their first choice candidate for lending money to.

Do you now have a job? Otherwise I find it really unlikely that they will actually give you a £16,000 loan (or any loan).

chalkie99

Borrow
£16,000.00
over 2 years
Representative
11.9% APR

The important word is "representative".

This is offered to 51% of successful applicants - in other words the creme de la creme of borrowers. It is likely that "fair bit of debt" on your credit card and maybe other factors the lender scores on is knocking you off that best rate.

groovedolphin

Hi,

Thanks for the replies. That makes sense. I guess I'll just have to suck it up - it must surely be less expensive in the long run than paying off the credit card.

Yes, as I indicated in my first post, I am no longer unemployed fortunately.

somethingcorporate

Sorry I misread. It is close to the headline rate so still not a bad quote.

You could also try the soft-quote option at nationwide as a comparison as this does not leave a footprint on your credit record.

groovedolphin

Bit of an Oh No Moment this afternoon, when I decided to apply for the NatWest loan. My application was turned down.

I guess I could try reapplying for a lower figure and leaving more on the card than I wanted to, but - is it remotely possible that if I spoke to a human being to explain that I wasn't extending my debt, just moving it around to make it cheaper, they'd reconsider? If I do have to leave it all on the card it's going to take a couple of years longer to pay off, unfortunately.

Any advice is welcome. I need to get away from that infernal credit card APR.

bargainbetty

You can ask, but there are restrictions on how much you can borrow, and they have no way of absolutely ensuring that you will use it as you say you will. The rule of thumb is 50% of your salary, less your total outstanding debt is the sum you might be able to borrow. If you got the money, then ran up the cards again, or just spent the cash, you'd be very unlikely to be able to repay everything, and that is too high a risk.

Give it a few months, and look for a low-life-of balance card (possibly with NatWest, if thay are your bank). You are more likely to get that than a 0% (harder to obtain than they used to be), and you might be able to get a chunk of the highest interest debt onto there instead.

Good luck

CLAPTON

how much do you earn?
how much are your existing debts?
when did you restart earning?

groovedolphin

Thanks a lot for the replies. I wonder if it might be possible to get the credit card company (MBNA) to convert the credit card into a loan? I mean - I already owe them the money so they aren't exactly going out on a limb, and if they close down the card I can't run up more debt.

In response to the questions:

£30,000
~£20,000
Nov 2011

Thanks for the replies and advice.

Tixy

Unlikely MBNA will consider converting to a loan. What is the APR on the card? are you aware you can opt out of any increase in the APR on the card?

How much are you currently paying towards the card debt a month? the minimum? or more?

CLAPTON

with an existing debt level of 20k and an income of only 30k you are already above the 50% loan to income level which makes it unlikely you will get any loan let alone a low APR deal.