Some Advice Please - New Loan to consolidate 2 car loans

nick100*2007

Hi, thanks for looking at this.

I currently have 2 car loans, total redemption figure is £14,100. after researching, I realise that I am paying a relatively high APR. My plan is to take out a personal loan for £14,100, pay the car loans back and then have a lower monthly payment in total.

I found a loan from M&S bank at 3.5% which worked out at saving me about £45 a month for 4 years which was great! I applied, but got a call today to say that my loan is approved but they can't offer me 3.5%, the rate they can give is 6.5% which makes it pointless.

The reason they won't honor the 3.5% is because of my exciting borrowing (2 car loans) even though on the application I stated that the purpose of the loan was consolidation.

Going forward, I intend to apply to other lenders but don't want this to affect my credit file, plus, will I ever know if the lender will give me the advertised rate or do I just have to apply to find out?

Nearlyold

What is the APR you are paying on the car loans? The rate must already be pretty low for car loans if an offered APR of 6.5% is pointless.

DCFC79

nick100*2007 wrote: »

Hi, thanks for looking at this.

I currently have 2 car loans, total redemption figure is £14,100. after researching, I realise that I am paying a relatively high APR. My plan is to take out a personal loan for £14,100, pay the car loans back and then have a lower monthly payment in total.

I found a loan from M&S bank at 3.5% which worked out at saving me about £45 a month for 4 years which was great! I applied, but got a call today to say that my loan is approved but they can't offer me 3.5%, the rate they can give is 6.5% which makes it pointless.

The reason they won't honor the 3.5% is because of my exciting borrowing (2 car loans) even though on the application I stated that the purpose of the loan was consolidation.

Going forward, I intend to apply to other lenders but don't want this to affect my credit file, plus, will I ever know if the lender will give me the advertised rate or do I just have to apply to find out?

Its a risk for the lender hence why the rate of 6.5% is offered. There's no guarantee you will use the loan to pay off the current loans.

You wont know what rate lenders will offer if you don't apply. There's the MSE tool you can use to give you an idea what rate you could get but its just to give you an idea, its not a definite you will get that rate.

iolanthe07

even though on the application I stated that the purpose of the loan was consolidation.

But they can't force you to consolidate the two car loans, therefore they are assessing your risk as if the new loan is in addition to the existing ones, hence the higher interest rate. Lots of people take out consolidation loans and then go and splash the cash on something else.