Getting a loan

wavodavo

Hello
I wonder if someone can help me. I've been looking to get a loan from my bank Barclays, £25000 over 5 years to pay off the rest of my car finance and to get rid of a credit card. I looked on there website and it says 6.7% apr and to log in and apply. I have been a customer for over 10 years and only taken a £1000 paid loan from them, which is now paid off. I have good credit history as I have had tools for my work on finance, the credit card and 2 cars on finance - one is a £30000 car, so I don't have much trouble in getting credit.
I logged in on the website but because I had no pre-selected offer, I had to apply by phoning or going into my local branch. As I only have every other Saturday off, I went in last Saturday and spoke to them. We went through the process of my outging etc - which I already worked out as I am strict on what I spend as I like to keep money back. I explained how much I want at the apr rate, they did not question this and so was going to a request through and give me a call back on Monday. I never got a call back and so had to make time from my work to see them again. There was nothing on the system to say that I had come in on the Saturday about the loan. I had to go all through the process again. I got shown a page on the screen on the computer which I never got shown before. When I said about the apr rate, they said thats only for the pre-selected offer only and the rate I would get it at would be 14.4%. It was still affordable and they put the application through yesterday.
I got a phone call today and said that I had been declined because I am finacially not viable in paying for the loan - even though it is to pay off existing finance.
Before I go looking for another loan, I have heared that applying to often can put your credit rating down. I went onto Moneysupermarket and the first loan came up was from the Clydesdale bank at 7.4%apr. I worked out at £496.92, this is £50 cheaper that what I am paying for on the car finance and credit card. Can this be correct?
I just want some advise and what were the factors that may have caused me to have a loan application declined. If I need to give more info just let me know.
Thanks
Dave

Tixy

Hi and welcome to the forum.

One thing with consolidation loans is that the new potential lender doesn't know that you will definitely use the money to repay your existing debts - and so they quite often assess if they think you can comfortably afford to repay the new debt as well as your existing debts.

Usually your own bank is the best chance of borrowing, as they know they most about you. If you run your account with them well, and they can see you have surplus funds each month and they decline you, then you are more likely to struggle to borrow from elsewhere.

Whilst you have been successful in borrowing large amounts on car finance this is judged very differently to an unsecured loan.

The rates quoted are representative rates only, and only 51% of successful applicants are offered them. Also watch out for what amount the representative APRS are based on, they are usually around the £7-£10k mark, most lenders have higher APRS for loans over £15k.

In terms of lots of applications affecting your ability to get accepted - its often advised to try to make no more than 3-4 credit applications in any 6month period. More than this and lenders will tend to be wary.

Ilona

Just a small point which jumped out at me, you say you want to get rid of a credit card. By taking out a loan and paying the card off you won't be getting rid of it, you only move it somewhere else. The only way to get rid of it is to cut your spending and pay it off, unless you wish to live on credit for the rest of your life and never have any money of your own. Just a thought.
Ilona

27col

Ilona wrote: »

Just a small point which jumped out at me, you say you want to get rid of a credit card. By taking out a loan and paying the card off you won't be getting rid of it, you only move it somewhere else. The only way to get rid of it is to cut your spending and pay it off, unless you wish to live on credit for the rest of your life and never have any money of your own. Just a thought.
Ilona

Obvious to some of us but, I'm afraid, not to many others. A debt is still a debt, no matter what name it masquerades under.

wavodavo

Ilona wrote: »

Just a small point which jumped out at me, you say you want to get rid of a credit card. By taking out a loan and paying the card off you won't be getting rid of it, you only move it somewhere else. The only way to get rid of it is to cut your spending and pay it off, unless you wish to live on credit for the rest of your life and never have any money of your own. Just a thought.
Ilona

As I have £1400 to pay off and only paying off £50 approx each month, the amount does not go down - not even if I pay £100 off. With the loan helping it, at least it would have been paid off after the 5 years.

SnowTiger

wavodavo wrote: »

As I have £1400 to pay off and only paying off £50 approx each month, the amount does not go down - not even if I pay £100 off. With the loan helping it, at least it would have been paid off after the 5 years.

I'm a bit confused.

You have £25,000 of debt and want to borrow another £25,000, but you're struggling to pay off a £1,400 credit card bill?

I take the point about the loan paying off the current debt, but a lender has no guarantee you will do that. They would pay the loan amount to you, and you could do anything you wish with it.

A new loan of £25,000 is seen as additional debt.

happycamel_2

I'd suggest you pay as much as you can off the card each month until it is cleared and then close it. After that look to applying again for a cheaper loan but beware of early repayment penalties on the car and that unsecured borrowing is often more expensive than secured borrowing (ie secured on the car). Also, whilst you may be able to overpay the car finance to clear it sooner you may not be able to with the loan and so will pay more interest overall (check this).

somethingcorporate

How much do you earn?

This will be key as if you do not earn well over £50k this is likely to be a non-starter.

wavodavo

Basically then, when any lender says for loans "consolidate your debts", this is a load of rubbish.
I very tight with my money - I save money on fuel by sending my girlfriend on the train and getting my dad to take her to work. Why would I want to make my self into more debt by using the £25000 on something else, I'm not that stupid.
I work for Volkswagen as a vehicle technician and earn approx £1250-£1400 varying on overtime and bonus. I still live with my parents as they can't afford to live without me paying £350 a month towards it. So as I can't find my own place to live, I tread myself to a new car. My current car is through work so there is now surprises and I had a car previously on finance which was all paid off bar the last month in which VW paid the rest off when I bought my current car - I am on a solutions system where after 3 years and can decide to change for another new car or pay off the existing finance over another 2-3 years.
The credit card was for holiday attraction tickets so that if anything happened and couldn't get my money back, I would be able to get it back through the credit card.
I always budget for my fuel allowence, car insurence is £87 a month and my girlfriend even gives me money towards the car because she doesn't drive. I don't spend money if its there, I like to kow that if I see something nice I can buy it.
The rest of the car finance to pay off is £17000, so rather than just get a loan to pay for the other finances, I'd rather get the 25k, so what is left over to be truth full would go towards a restoration project of a rare classic car and once restored would increase in value to what was spent on it.
I have nothing to hide, I'm truthful and honest and just wish my bank had seen that.

DCFC79

wavodavo wrote: »

Before I go looking for another loan, I have heared that applying to often can put your credit rating down. I went onto Moneysupermarket and the first loan came up was from the Clydesdale bank at 7.4%apr. I worked out at £496.92, this is £50 cheaper that what I am paying for on the car finance and credit card. Can this be correct?
I just want some advise and what were the factors that may have caused me to have a loan application declined. If I need to give more info just let me know.
Thanks
Dave

Ok frist thing, all the moneysupermarket site showed you was what you could get for an apr, its when you actually go through to the application stage and apply you actually what the apr is.

wavodavo wrote: »

Basically then, when any lender says for loans "consolidate your debts", this is a load of rubbish.
I very tight with my money - I save money on fuel by sending my girlfriend on the train and getting my dad to take her to work. Why would I want to make my self into more debt by using the £25000 on something else, I'm not that stupid. How does the bank know that ?

I work for Volkswagen as a vehicle technician and earn approx £1250-£1400 varying on overtime and bonus. I still live with my parents as they can't afford to live without me paying £350 a month towards it.

You earn lets say a min of £15k and you want to burden yourself with a loan of 25k, that might be the reason plus your borrowing an extra 25k on top of the current debt.

Tixy

wavodavo wrote: »

As I have £1400 to pay off and only paying off £50 approx each month, the amount does not go down - not even if I pay £100 off. With the loan helping it, at least it would have been paid off after the 5 years.

This cannot be the case. There is no way the balance wouldn't go down if you pay off £100 a month and don't respend on the card.

At £1400 even if the APR was a very high 40% the interest would only be £44 and you'd pay off £56 in the first month. And if you paid £100 every month even with a that high an APRit would take just 19months to be fully repaid.

If the APR is lower it would take even less time.

On your income level you have no chance of a £25k loan. I would work on paying off the card as quickly as possible, and then start saving for your restoration project.