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Unsecured loan vs credit card? plus other newbie questions

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Hi,
Im looking to borrow £4k over a 3 year term, something ive done before with no problem from my bank (barclays), however when I spoke to them I was surprised to hear them say that as they hadnt got anything 'prequalified' for me and this meant I was likely to be refused.

Doesnt make much sense to me as my history should be broadly good, im 26, just finished paying off a practically identical loan, have a credit card which ive borrowed money on before and paid off (presently clear). My only failing is a forgetfullness to make the minimum payments on my credit card in the past, which was corrected a few months ago when my bank relented and decided I could have a direct debit to pay it.

Anyway, 2 questions. Is it worth me trying to explain why im not a high risk to my bank, or will it be 'computer says no?' Im sure a human being would agree with my view if they saw my history. Alternatively I guess just try somewhere else?

Second question, would it be reasonable to get a credit card instead and pay it using that? what are the pros and cons vs an unsecured loan?

Comments

  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    first thing to do is to get copy of your credit records to see whether the late payments are recorded as this will affect how lenders view you.

    i don't really understand about your bank allowing DD... all normal a/cs allow DDs and nearly all CCs allow DD payments too.

    why do you want to borrow money and pay all that interest to the bank... could you not simply save up until you have enough savings ( you earn interest rather than pay it)

    that said whether or not it makes sense to borrow on a CC or a loan all depends upon the interest rates APRs, how much you can afford to repay each month, whether you want to be able to overpay and your credit rating.

    With a CC you also need to work out how you access the money... what do you intend buying with the 4k.. can you use a CC for this purchase? if so a life of balance card might be a cheap way of borrowing.
  • CLAPTON wrote: »
    first thing to do is to get copy of your credit records to see whether the late payments are recorded as this will affect how lenders view you.

    Rightyo, will do this :) have put it off for too long already I think
    CLAPTON wrote: »
    i don't really understand about your bank allowing DD... all normal a/cs allow DDs and nearly all CCs allow DD payments too.
    I didnt understand it either. All I know is that when I asked about 9 months ago can i set up a DD they said no, then 3 or 4 months ago they asked me if id like to set up a DD for it.

    CLAPTON wrote: »
    why do you want to borrow money and pay all that interest to the bank... could you not simply save up until you have enough savings ( you earn interest rather than pay it)
    No really good reason, short of the 'i want it now' factor. I want to restore a classic car of mine so that I can use it every day and get rid of my other cars. The cost of borrowing is acceptable to me for the privilege of having it now.
    CLAPTON wrote: »
    that said whether or not it makes sense to borrow on a CC or a loan all depends upon the interest rates APRs, how much you can afford to repay each month, whether you want to be able to overpay and your credit rating.

    With a CC you also need to work out how you access the money... what do you intend buying with the 4k.. can you use a CC for this purchase? if so a life of balance card might be a cheap way of borrowing.

    The APRs according to moneysupermarket would be about .5% higher for a card compared to a loan, which is no problem to make my purchases with. I have no idea what a life of balance card is? I like the idea of it being easier to make overpayments whenever i feel like with a credit card, as ive previously been missold a loan where I had to let it run the full duration (id been told I could overpay whatever, whenever at no additional cost)
  • ajaxgeezer
    ajaxgeezer Posts: 2,476 Forumite
    Lanciachris,

    A life-of-balance card is what it says... the interest rate you pay is for the life of the balance until it is paid off. See Martin's article here:

  • I have read your last post. It was quite nice and very helpful to give the information about the loans. Here I would like to ask one thing is that how much the website is helpful to provide the loans of any type. Look here I am giving the link of one site which I thaught is good(according to the content of the site ), in case of unsecured loans , Can you watch it and provide the information related to the site?

    waiting for the reply :)
  • firesidemaid
    firesidemaid Posts: 2,136 Forumite
    Part of the Furniture Name Dropper Combo Breaker Bake Off Boss!
    how do i report this?:spam:
  • Hi,
    I need some advice. I have a personal loan with Alliance and Leicester & I am considering the "card trick" to transfer it to either a 0% or fixed rate balance transfer card. I have read the article (concerning the egg card account) & was just wondering if I can pay the loan off using my A&L credit card & then balance transfer this to another card? Or does it have to be done via the egg route?
  • ajaxgeezer
    ajaxgeezer Posts: 2,476 Forumite
    I'm guessing that paying a loan off would be treated as a cash advance, thus incur fees and also A&L would ask what the hell you were doing as you'd be transferring to a much higher rate. Have you looked at your A&L loan to see if the penalties under the T&Cs are worth doing it?

    Do you actually have the Egg card yet? This might(?) be better in the Credit Card forum.
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    10,000 Posts Combo Breaker
    you usually (always) can't pay a loan off with a credit card unless the credit card allows a balance transfer to a loan.

    this is why the complicated system using egg money card (and NOT the egg card) is suggested as a way to move the money around.
  • Ok thanks for that. Don't have the egg card yet, will be applying as soon as possible (has anyone experienced any problems applying, with a good credit rating?) & then get the ball rolling, fingers crossed.
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