High interest rate bank loan

smudge_don

Afternoon MSE forum,

I've had a loan with RBS for a couple of years now and in a recent review I found out it's at some silly interest rate like 20%!

So the employee at RBS very kindly did a quick review with me, looking at my credit cards as well so that we can consolidate into a loan with a better rate and clear my credit card debt.

I currently have just under £7k outstanding on the existing loan and the proposal was to refinance at £9,500 to clear my credit cards and start a new loan on just 4.6% which saves me about £80/month on my monthly repayments.

So, a win/win situation right? The bank get's more money out of me, I clear my credit cards (saving me about £200 a month) and a further £80/month saved on my overall loan repayments

Now, my credit rating isn't the best due to moving address quite a few times over the last few years and having my credit cards near the limit most of the time. I'm fully aware of this and consolidating the loan and credit cards would help me to further improve my rating. But because the computer at RBS said "no" to my application, it means I'm told I have to stay on this higher rate loan.

Surely this can't be right? Why should I have to pay more money out each month just because the computer doesn't like my credit rating? Anyone with an ounce of common sense can see it would save me nearly £300 a month.

I asked for the decision to be looked into and RBS fudged it all up - I won't go into that. The long and short is that I'm being made to stay on a high interest rate loan rather than consolidating and saving myself £300/month

Does anyone have any ideas how I can resolve this please?

Thanks

lee111s

Unfortunately you accepted the loan at the 20% interest rate so you don't really have any recourse.


You can't force a lender to lend to you, it's their money, they can give it to whoever they chose.


You don't really have many options to be honest. You could try with another lender but if you have a poor credit history then it's unlikely you're going to get a market leading rate, especially when you have quite a large amount of debt already outstanding.

smudge_don

Gone are the days of speaking to your bank manager or someone who can actually apply some common sense to a situation. It's all just computer-based now and if the computer says no, that's pretty much it I guess?

I know I've signed up to it and there's not much I can do. I just don't see how they can say no to helping me improve my situation when it's also beneficial for them. Doesn't make any sense to me or the people I've spoken to at RBS

lee111s

The issue is, once they put the money into your current account, they don't know what you're going to do with it.




It's all well and good saying your going to pay off other debts, but how many people have said that in the past and then simply went and spent the money?


So instead of being in £9500 of debt, you're now in £19000 of debt and struggle to make repayments.

smudge_don

True, I can see it from that point of view as well. However we even looked at refinancing just the existing loan and leaving the cards out of it, to bring me down to a more reasonable interest rate. So they're not lending me anything more and the money loaned would be used, there and then, to pay off the existing loan

But the decision on this was still a no...?

lee111s

Have you been into branch and asked to speak to the bank manager to see if anything can done?


The other thing to remember is that they're a business. It wouldn't really make sense for them to ultimately reduce their income by lowering the amount of interest they're charging you.

Cycrow

How is it a win/win situation exactly ?
if you are paying less money, then the bank is getting less money, so its not a win for them

Pixie5740

It's not rocket science. You don't have a great credit history due to a number of factors therefore you are a greater risk as a borrower meaning that you will not be offered the best interest rates available. Surely common sense tells you that.

I don't see how it can just have come to light that you are currently paying an eye watering 20% APR for the loan. Did you not read the paperwork when you accepted the loan or any of your annual loan statements?

smudge_don

No other excuse apart from the fact I was very young when I got that loan and I didn't know what I was really doing...

Yes I understand that's stupid but it's the facts

Yes I understand they're a business but having been with RBS for 15 years I would've hoped they could do something a little more to help my whole situation

No I haven't managed to get an appointment with the local branch manager, it's always been other employees carrying out the reviews

Gaz83

smudge_don wrote: »

True, I can see it from that point of view as well. However we even looked at refinancing just the existing loan and leaving the cards out of it, to bring me down to a more reasonable interest rate. So they're not lending me anything more and the money loaned would be used, there and then, to pay off the existing loan

But the decision on this was still a no...?

Banks are in business to make money.

If you knew someone was going to eventually give you £5,000, would you allow them to refinance and only give you £4,000?

iolanthe07

Remember that banks will only 'help' you if it is their interest to do so.