Getting Another Loan Question?

byronwells

Alright guys

I am little bit shocked after speaking to Tesco's in regards to loans and I need some advice of what to do please..

I already took out a loan with Tesco's last year for £10K over 5 years.. Even though their website, and their staff are quick to promote the 3.7% interest rate which is far from the truth, when actually it's 7% APR which doesn't bother me because I am paying £202 per month on a regularly basis

So I thought today I would phone them up to see if I could add another 5k to it.. Again they said yes and again they said possibly at 3.7% plus if you got a clubcard you would get a discount. But then going through the actual application process for me to take out another 5k with them, they are now going to charge me at 10% Apr which makes it £301 per month... Even though they did say it could be £255 per month.. Way big jump.

Now I don't know if this is a good idea or not.. If I should take another loan with another company and clear the tesco loan off??

DCFC79

byronwells wrote: »

Alright guys

I am little bit shocked after speaking to Tesco's in regards to loans and I need some advice of what to do please..

I already took out a loan with Tesco's last year for £10K over 5 years.. Even though their website, and their staff are quick to promote the 3.7% interest rate which is far from the truth, when actually it's 7% APR which doesn't bother me because I am paying £202 per month on a regularly basis

So I thought today I would phone them up to see if I could add another 5k to it.. Again they said yes and again they said possibly at 3.7% plus if you got a clubcard you would get a discount. But then going through the actual application process for me to take out another 5k with them, they are now going to charge me at 10% Apr which makes it £301 per month... Even though they did say it could be £255 per month.. Way big jump.

Now I don't know if this is a good idea or not.. If I should take another loan with another company and clear the tesco loan off??

Depends if you can get another loan of a rate that's acceptable to you to do what your thinking. The amount your wanting to get will have some bearing if your accepted along with your credit history.

The 3.7% is what 51% of applicants receive, doesn't mean you will get that though.

Pixie5740

The advertised rate of 3.7% APR is not far from the truth. 51% of successful applicants are offered that rate. For whatever reason you are not Tesco's ideal borrower and so have been offered a higher rate.

Whether or not you'd be offered a better rate with a different lender I cannot say.

byronwells

I am wondering if it has got anything to do with the fact that I have only got two years of credit history? From when I started paying for the car insurance??

DCFC79

byronwells wrote: »

I am wondering if it has got anything to do with the fact that I have only got two years of credit history? From when I started paying for the car insurance??

Maybe.

Have you not got a credit card you have had for more than 2 years.

byronwells

DCFC79 wrote: »

Maybe.

Have you not got a credit card you have had for more than 2 years.

I have never ever own a credit card.... One of the things that I decided never to own.. Don't like them/don't trust them, etc.....

retepetsir

What is your income?

byronwells

retepetsir wrote: »

What is your income?

£18,500 per year

Ebe_Scrooge

That'll have a major bearing then. The general, broad, rule of thumb is that lenders are reluctant to lend more than about 50% of your salary. Your existing 10K loan is already more than that, so adding another 5K is seen by the lender as being pretty risky ( in terms of your ability to pay ) . Hence the higher interest rate.

byronwells

Ebe_Scrooge wrote: »

That'll have a major bearing then. The general, broad, rule of thumb is that lenders are reluctant to lend more than about 50% of your salary. Your existing 10K loan is already more than that, so adding another 5K is seen by the lender as being pretty risky ( in terms of your ability to pay ) . Hence the higher interest rate.

But I am not paying the loan back in a year... I am paying it back in 5 years.. £18,500 is my yearly salary, per year, not the overall duration of the loan (meaning I am not get £18,500 every five years)

Gaz83

byronwells wrote: »

But I am not paying the loan back in a year... I am paying it back in 5 years.. £18,500 is my yearly salary, per year, not the overall duration of the loan (meaning I am not get £18,500 every five years)

Doesn't matter.