£13,000 Loan at 7.1% - Could We Get Better?

Legacy_user

Hi all

We are looking to get a new car, and rather than getting car finance we wanted to get a loan, over 3 years. Obviously Sainsbury's and Tesco come up best, so we have applied to Sainsbury's, and the rate quoted online was 5%...we have received the paperwork today, and they are offering us 7.1%....I just don't know if this is a good rate, or whether we could get better? I'm obvious concerned if we started applying through others then it will show on our credit score, and it is only a difference of £14pm so do we just accept this?

Would love anyone's opinion.

Malky

If you're an extremely low risk borrower, then it is entirely possible to get a loan at the quoted rate. However, once a credit check has been done then the lender will quote you a rate matched to your credit file and how much of a risk they perceive you to be. The rate you have been quoted seems fair but you risk pushing that APR up a little if you start making more applications in a short space of time.

System

I know that's what I thought - I don't want too many showing on my credit score. I have a clean credit score, never defaulted on anything, don't have any credit out at the moment (paid off my loan earlier this month..yeh!) but wasn't sure if 7.1% was something I should consider, when you search loans there are soo many at 5% but there is every chance they will all actually offer 7.1% so I don't really want to go applying for too many. Is it possible the loan paid off at the start of the month is still showing to them? If it is, would it show the balance at last month, as it was only £450-ish so surely that wouldn't affect the scoring? So perhaps it is just my luck for being low risk?!

DevCoder

7.1% is a very good rate tbh

System

Is it? Thanks for letting me know that! I'm currently frantically trying to do more credit checks to see if anything has went wrong!!

Apples2

7.1% is entirely decent and better than anything you would likely get at a second hand car dealer.

Congratulations for becoming debt free 5 days ago. Are you not tempted to spend a while owing nothing to anyone and seeing the savings rocket?

Malky

Apples2 wrote: »

Congratulations for becoming debt free 5 days ago. Are you not tempted to spend a while owing nothing to anyone and seeing the savings rocket?

I was thinking the same thing. Debt free for less than a week and then contemplating jumping straight back in again.

System

I'd love to stay debt free but I just passed my driving test a few months ago (I know, 30+ and just taking lessons!!) and with the baby on the way I think a car is essential, if we can afford it, which we can, and I think being able to pay a car off in 3 years is pretty good too

Thanks for the input guys, I just wasn't sure if 7.1% was a decent rate, but I guess it is so I'll go with that!

Cycrow

u've just passed your test and going to spend 13k on a new car?

have you thought about how much the insurance is going to be for that?

wouldn't it be better to buy a cheap car for your first year of driving

System

It's for the car, insurance for the first year, and tax disc. The insurance is a lot.

Apples2

I hope you have thought that through properly, you have to pay for Insurance twice more before you have finished repaying just the first year.