how do you shop around for a loan?

ollski

I'm in the market for a loan for a vehicle for a self drive hire business I'm starting up. I tried zopa and nationwide on the soft search and they came back with a rate of around 12% for both.


Now I'm a big one for shopping around but how do you do that with a loan?, are all lenders going to offer me roughly the same rate?. As far as I can make out you get one chance to apply to a company before your credit file makes you unappealing and yet the provider doesn't have to tell you the cost of their product until after you have already used this single opportunity. Is there a matching service available for loans as there is for credit cards?

the_insider

Do you have a business account? Probably best speaking to yout relationship manager, they'll probably be able to get you the best rate based on your business.
You won't be able to use a retail loan for a business purchase.

ollski

No it's a start-up business so to make it simple I want to obtain a personal loan as there is also an element of consolidation athough I have 10k of my own to throw in. So basically I need 25k to shuffle around but need to borrow 15 of it.

Tixy

Most personal loans cannot be used for business purposes.

E.g. nationwide which you have mentioned http://www.nationwide.co.uk/loans/FAQs.htm

What can a personal loan be used for?
Personal loans can be used for almost any purpose, such as a car purchase or consolidation of other credit commitments.
They cannot be used for:

• business purposes;
• timeshares;
• speculative reasons;
• bridging loans.

19lottie82

Ok, first off if you tell a lender what you want the loan for they will refuse you a personal loan and direct you to a business loan.

Why are you so geared towards a personal loan, than a business one?

You could lie on the application and they may not question it, but as most people will tell you on here, that would be fraud. Your choice however, although I wouldn't advise it.

Even if you do want to go down that route, for most personal loans a lender will ask that your loan amount total no more. Than 50% of your current salary minus any outstanding debts you already have (this still applies if you are planning to use it for consolidation). So for example, if you have 5k worth of debt already and want to borrow 15k, you would need to be earning circa 40k.....

Apples2

If you do decide to run toward a Personal Loan, lenders won't see your £10k cash, they are only interested in your debts.

You seem to have around £10k to consolidate. Why are these still there if you have £10k cash?

Your chances of a obtaining decent rate will be better if you have no current exposure to debt.

If it's a Business Loan, you will need your own contribution so with your current debts, it doesn't appear to be the right time.

ollski

Apples2 wrote: »

If you do decide to run toward a Personal Loan, lenders won't see your £10k cash, they are only interested in your debts.

You seem to have around £10k to consolidate. Why are these still there if you have £10k cash?

Your chances of a obtaining decent rate will be better if you have no current exposure to debt.

If it's a Business Loan, you will need your own contribution so with your current debts, it doesn't appear to be the right time.

I'm happy to take a business loan if that's the best way but as it's not strictly business I'm not sure that's the best way. will break it down if it helps explain my requirements.


I have 5k on credit cards but they are all on 0% so I just tend to balance transfer them and keep my cash working.


Kids ride horses so I want to buy a horsebox, instead of it sitting on the drive I want to rent it out for self drive hire while I'm not using it, this is the 'business' aspect to it. The business doesn't exist at the moment


Currently spending 500 a month on diesel for our old 4wd so I could do with losing this by getting an older efficient runaround.


An extra 20k will sort all this out and when I say consolidate I am talking about all these different expenses being on one repayment.


Advice appreciated, but I am more interested in the points in my original post. Thanks

Tixy

but I am more interested in the points in my original post.

Shopping around a lot for a loan is not really possible, but you can make a couple of applications. There is no way to know what APR you will be offered if a potential lender accepts you.

As far as I can make out you get one chance to apply to a company before your credit file makes you unappealing and yet the provider doesn't have to tell you the cost of their product until after you have already used this single opportunity.

Not really one chance. Its true that making lots of application is likely to cause issues with the later ones, but a 2 or maybe 3 in a day shouldn't alter the rates you are offered on those 3.

Are you looking to get a £25k loan and pay off your existing £5k cards? Or are you looking to get a £15k loan and plus use some savings and then pay off your £5k cards?

You've go indicative rates from 2 lenders so far. If that was £25k then I'd say 12% is a pretty decent rate (as representative loan rates tend to increase when borrowing above £15k). It might be worth talking to your own bank to see if they are able to given you an indicative quote without doing a credit search.

ollski

Thanks, looking to loan about 15k and pay credit cards off with savings at the end of this 0% term. I think I have a few late payments on my file over the last few years which drop me down on my score, I think it's about 800 although I know that means very little.


I do like the idea of the peer to peer lending of zopa and ratesetter and the much more flexible terms preferable although they both quoted a high setup fee, is that loaded to risk?

Tixy

If you punched in a loan of £15k to nationwide it might be worth running a new quote at £14999.
Represntative APR for 14999 - 5.9%. At 15000 its 7.3%

Herzlos

ollski wrote: »

Kids ride horses so I want to buy a horsebox, instead of it sitting on the drive I want to rent it out for self drive hire while I'm not using it, this is the 'business' aspect to it. The business doesn't exist at the moment

Have you worked on a business plan to see if that is viable? Off the top of my head you've probably got insurance and liabilities to deal with, plus depreciation and admin to deal with. I've no idea what existing hire companies in your area charge for horse box hire but I assume you're looking at the region of £50/day which probably comes down to under £25/day by the time your expenses are dealt with.

I'd make up a plan for the hire and try to borrow that independently (or use some of your £10k in cash) - you can get a brand new Ifor Williams 2 horse trailer for £4,645.50 Inc. Vat.

It does have a gross weight 2600kg though, so you'll need to be careful in checking that your customers can actually tow it (in terms of their vehicle and license).

Then take out a personal loan for a new 4x4 for yourself and assign some business mileage allowance for when you're using it to deliver the trailer to customers.