personal loan approved but on higher interests than offered at the start, why?

edloucka

Hi there,
Can anyone help us. We are trying to consolidate our loans and put down interest on our current personal loan (15% RPI) at the moment. So we thought to take personal loan of £13000 on 4.8% interest what would cut down our monthly payments nearly £50 less and we would clear out our credit cards as well. So it would make saving of nearly £150 a month. But!! We've applied for this low interest loan 4.8% to repay our existing 15% interest loan. The loan have got approved but only on 15% again!!!! Can anyone please explain why? Should we try to apply somewhere else? How can they offer 4.8 and than after approval put it up to 15%?
Please can anyone give us some advice as it would make financial sense and we would pay much less monthly payments if we can do that.Thank you.

[Deleted User]

Only 51% of successful applicants will be offered the headline rate. With a lot of existing debt, you were always very unlikely to get a 4.8% rate.

You could try elsewhere, but I think your chances are slim.

DCFC79

Was a loan at 4.8% actually offered ?

lynz68

How much debt in total do you currently have? What is your income? Without knowing these it's quite hard to provide advice.

But roughly if the total of your current debt plus the £13000 you are looking to borrow is more than 50% of your income your highly unlikely to get offered a lower rate.

Just to clarify the lender cannot guarantee you will pay of your current debt so will take this into account when making there decision.

Consolidating debt is not really a good idea maybe look at other ways of cutting back.

d70cw6

dont confuse the "advertised" rate to the "offered rate".
As others have said, the advertised rate of 4.8% if for 51% of low risk applicants. Those trying to consolidate their debts will be offered loans at much higher APRs.

suzyT

This has just also happened to us with Santander
£10,000 loan excepted then received the letter today with a interest rate of 15.7% not the online rate offered of 4.5%.


Not to sure as to why as have a good income with a healthy bank balance, my mortgage is also with Santander and never missed a payment have another personal loan with Sainsbury's which has been running for 2 years again no missed payments and then just my general day to day expenses.


We are also in the process of re-mortgaging as we are buying another house to let out.


Im self employed so my yearly income goes up and down.


Any more advise would be appreciated

Thrugelmir

suzyT wrote: »

This has just also happened to us with Santander
£10,000 loan excepted then received the letter today with a interest rate of 15.7% not the online rate offered of 4.5%.


Not to sure as to why as have a good income with a healthy bank balance, my mortgage is also with Santander and never missed a payment have another personal loan with Sainsbury's which has been running for 2 years again no missed payments and then just my general day to day expenses.


We are also in the process of re-mortgaging as we are buying another house to let out.


Im self employed so my yearly income goes up and down.


Any more advise would be appreciated

How much do owe in unsecured debt in total? As this have a bearing on any decision. We are now in an era of responsible and affordable lending. Borrowing simply to sustain lifestyle is out of vogue.

Tixy

suzyT wrote: »

This has just also happened to us with Santander
£10,000 loan excepted then received the letter today with a interest rate of 15.7% not the online rate offered of 4.5%.

Not to sure as to why as have a good income with a healthy bank balance, my mortgage is also with Santander and never missed a payment have another personal loan with Sainsbury's which has been running for 2 years again no missed payments and then just my general day to day expenses.

We are also in the process of re-mortgaging as we are buying another house to let out.

Im self employed so my yearly income goes up and down.

Any more advise would be appreciated

What advice were you after? The APR you are offered is based on the bank's risk assessement of your financial situation (or if a joint loan then both applicant's situation).

That will include the information on your credit file but also the other information on the application (including things like your employment status and income).

By the way if you are in the process of trying to obtain a mortgage or remortgage then people are generally advised not to make any credit applications in that time, as there are many cases of mortgage offers being withdrawn due to people taking on new credit commitments and affecting their perceived affordablity.