Personal Loans - Two Questions

BobCooney

Hi all :hello:

A couple of questions that are admittedly quite basic in the larger scheme of things but I hope you will be able to help me. I want to borrow £10k for a new car purchase and applied to Sainsbury's but was offered 7.1% as opposed to the advertised 4.1%. I expected that we wouldn't get the advertised APR as we've moved house twice in the last year and for some reason Sainsbury's seemed to have an issue accepting the address for our previous place. However, 7.1% was higher than I expected so:

1. Should I reapply elsewhere (ie. Tesco) in the hope of a lower APR or would I be likely to receive the same(ish) rate there, or even higher as there is now the Sainsbury's credit search on my file? FWIW, it is a joint application with household income of £100k/year so I don't think the earnings are the issue (expenditure is 'comfortable' with little other debt other than a mortgage).

2. If I go with the Sainbury's loan it would be for 5 years. However, in light of the higher APR, I would like to pay it off earlier if possible in order to save some interest. It is a £10k loan, 7.1%, monthly payments of £197.44 with total interest of £1846.40. If I were to pay it off after, say, 3 years, and taking into account the 58 days interest that would be payable, can anyone help me with a rough idea of how much I would save? I've tried working it out myself but have ended up utterly confused.

Thanks

CLAPTON

BobCooney wrote: »

Hi all :hello:

A couple of questions that are admittedly quite basic in the larger scheme of things but I hope you will be able to help me. I want to borrow £10k for a new car purchase and applied to Sainsbury's but was offered 7.1% as opposed to the advertised 4.1%. I expected that we wouldn't get the advertised APR as we've moved house twice in the last year and for some reason Sainsbury's seemed to have an issue accepting the address for our previous place. However, 7.1% was higher than I expected so:

1. Should I reapply elsewhere (ie. Tesco) in the hope of a lower APR or would I be likely to receive the same(ish) rate there, or even higher as there is now the Sainsbury's credit search on my file? FWIW, it is a joint application with household income of £100k/year so I don't think the earnings are the issue (expenditure is 'comfortable' with little other debt other than a mortgage).

2. If I go with the Sainbury's loan it would be for 5 years. However, in light of the higher APR, I would like to pay it off earlier if possible in order to save some interest. It is a £10k loan, 7.1%, monthly payments of £197.44 with total interest of £1846.40. If I were to pay it off after, say, 3 years, and taking into account the 58 days interest that would be payable, can anyone help me with a rough idea of how much I would save? I've tried working it out myself but have ended up utterly confused.

Thanks

you would save approximately £300 ish in interest as most of the interest is paid in the early years as you owe more then than in the later years


one doesn't know your circumstances but on 100k income pa one wonders why you aren't paying cash

Gaz83

No-one can answer your first question as lenders don't publish their lending criteria.

BobCooney

CLAPTON wrote: »

you would save approximately £300 ish in interest as most of the interest is paid in the early years as you owe more then than in the later years


one doesn't know your circumstances but on 100k income pa one wonders why you aren't paying cash

Yeah, that's the figure I was coming up with which didn't seem a huge saving, hence why I was doubting my calculations.

A very fair point which I was going to elaborate on in my initial post but thought it was already long enough! The short answer is having just bought a place we haven't got a lot of spare cash at the moment and thought a £10k loan made more sense, paid off after three years once we had built up some savings again, although that decision was made before being offer a higher than expected APR.

BobCooney

Gaz83 wrote: »

No-one can answer your first question as lenders don't publish their lending criteria.

Thanks for your response. Yeah, I assumed that would be the answer but I thought a general rule of thumb might be that having moved house recently would be an issue that all lenders would be 'troubled' be.

Cash_Flow

BobCooney wrote: »

Hi all :hello:

A couple of questions that are admittedly quite basic in the larger scheme of things but I hope you will be able to help me. I want to borrow £10k for a new car purchase and applied to Sainsbury's but was offered 7.1% as opposed to the advertised 4.1%. I expected that we wouldn't get the advertised APR as we've moved house twice in the last year and for some reason Sainsbury's seemed to have an issue accepting the address for our previous place. However, 7.1% was higher than I expected so:

1. Should I reapply elsewhere (ie. Tesco) in the hope of a lower APR or would I be likely to receive the same(ish) rate there, or even higher as there is now the Sainsbury's credit search on my file? FWIW, it is a joint application with household income of £100k/year so I don't think the earnings are the issue (expenditure is 'comfortable' with little other debt other than a mortgage).

2. If I go with the Sainbury's loan it would be for 5 years. However, in light of the higher APR, I would like to pay it off earlier if possible in order to save some interest. It is a £10k loan, 7.1%, monthly payments of £197.44 with total interest of £1846.40. If I were to pay it off after, say, 3 years, and taking into account the 58 days interest that would be payable, can anyone help me with a rough idea of how much I would save? I've tried working it out myself but have ended up utterly confused.

Thanks

You can also try Nationwide for a online loan quotation which unlike Tesco will not leave a foot print on your credit file.

[Deleted User]

How urgent is the need for the new car?

I ask because, based on each of you earning £50K, your combined take home salary will be about £4K pm.

If you could manage your living expenses on half that, you could buy the car outright, in less than 6 months, thereby saving yourself nearly £2K in interest.

purdyoaten

Bedsit_Bob wrote: »

How urgent is the need for the new car?

I ask because, based on each of you earning £50K, your combined take home salary will be about £4K pm.

.

Would it not be closer to 6k take home? Typo?

[Deleted User]

Oops.

It is closer to £6K.

Based on that, and again assuming 1/2 available for saving, the OP could have the car in just 4 months.

DCFC79

7.1% is still not a bad rate to get, no its 4.1% but could be worse like 15%.

Quimoi

Just a small point but if you are allowed to make overpayments without any penalty then, instead of paying off the whole balance when you are ready to, pay off all but £1 of the loan and then pay the final £1 as a second payment. You'll avoid the early redemption interest penalty in that way.