Need a Loan?

BenjaminClarke

Go through your bank! Do not do what I did and use a comparison website. I used Compare the Market and the best rate being offered was 3.4% APR... that's in theory only though. We needed a loan to consolidate our debt and decided to go through Tesco Bank as the rate they offered was good and we had heard good things about them. I applied online and was totally honest with them about what the loan was for. They even had an option to say that this loan was to consolidate our existing credit card debts. I was told they'd have a decision in two days. Seven days later I finally got a text message saying that our £5000.00 loan has been approved and the paperwork was in the post. Another few days passed and the paperwork finally arrived. I opened it and to my horror saw the interest they were going to charge... 15.8%!!! Almost as much as the interest charged by the credit card we were trying to consolidate! In total over the five year period we'd have paid back over £7000.00!! I tore up the application there and then before phoning Tesco Bank to tell them I would certainly NOT be taking them up on their loan offer and that the entire process had been a complete waste of time. I have since applied at my bank, NatWest, who have approved the £5000.00 loan immediately on a rate of 3.9% APR. I am still staggered that Tesco's rate could be so far from what was being offered on the price comparison website and in the future I will always go to my bank over such matters. Yes, on paper 3.4% is better than 3.9% but you won't get the 3.4%, it's a made up number, plucked from the sky by desperate lenders looking to exploit vulnerable people.

foxy-stoat

Well done for securing a decent rate, the best APR rate on the Natwest website at the moment for £5K is 6.9%......normally you have to borrow over £7,499 to get the 3.9% rate. Do yourself a favour and cancel the credit cards once they are paid off.

Consolidation loans are always a higher risk than other reasons for wanting the money, thats probably why Tesco's rates were so far apart, they do not like lending for consolidation of other debts.

DCFC79

BenjaminClarke wrote: »

Go through your bank! Do not do what I did and use a comparison website. I used Compare the Market and the best rate being offered was 3.4% APR... that's in theory only though. We needed a loan to consolidate our debt and decided to go through Tesco Bank as the rate they offered was good and we had heard good things about them. I applied online and was totally honest with them about what the loan was for. They even had an option to say that this loan was to consolidate our existing credit card debts. I was told they'd have a decision in two days. Seven days later I finally got a text message saying that our £5000.00 loan has been approved and the paperwork was in the post. Another few days passed and the paperwork finally arrived. I opened it and to my horror saw the interest they were going to charge... 15.8%!!! Almost as much as the interest charged by the credit card we were trying to consolidate! In total over the five year period we'd have paid back over £7000.00!! I tore up the application there and then before phoning Tesco Bank to tell them I would certainly NOT be taking them up on their loan offer and that the entire process had been a complete waste of time. I have since applied at my bank, NatWest, who have approved the £5000.00 loan immediately on a rate of 3.9% APR. I am still staggered that Tesco's rate could be so far from what was being offered on the price comparison website and in the future I will always go to my bank over such matters. Yes, on paper 3.4% is better than 3.9% but you won't get the 3.4%, it's a made up number, plucked from the sky by desperate lenders looking to exploit vulnerable people.

To get the headline rate you need to be 1 of the 51% of applicants.

Maybe you weren't a customer Tesco wanted, maybe they didn't like the debt consolidation as it is a risk or maybe they didn't like something else.

burlington6

You don't sound like a good bet OP, so that's why Tesco did what they did

BenjaminClarke

Totally agree with all comments. Tesco obviously didn't want us as customers. What has bothered me the most though is the fact that it has had a negative effect on our credit score and the time it took for them to offer us this rate! Two weeks in total to be told 15.8% isn't good enough. Had it been straight away I wouldn't have been as bothered. Anyway, NatWest to the rescue again for us. I just hope that the interest rate doesn't shoot up when we go to sign. Perhaps we won't be getting the 3.8% they were offering judging on what Foxy has said...

DCFC79

BenjaminClarke wrote: »

Totally agree with all comments. Tesco obviously didn't want us as customers. What has bothered me the most though is the fact that it has had a negative effect on our credit score and the time it took for them to offer us this rate! Two weeks in total to be told 15.8% isn't good enough. Had it been straight away I wouldn't have been as bothered. Anyway, NatWest to the rescue again for us. I just hope that the interest rate doesn't shoot up when we go to sign. Perhaps we won't be getting the 3.8% they were offering judging on what Foxy has said...

Yep your credit score has had a negative effect, now all lenders will see your poor credit score. That's the idea behind applying to see what rate you can get.

foxy-stoat

Take a look a the website and see their advertised rates. I also bank with Natwest and got a loan last year, think it was around 9% for £8K. Good luck and keep us updated once its been agreed.

BenjaminClarke

Just checked my credit score and I am still in the excellent category so it hasn't had a massive effect yet. I will update you on the final rate we get.

Pixie5740

Your credit score doesn't matter. Lenders don't use them, they actually use the information in your credit file. The CRA don't lend money so the fact that one them rate you as excellent doesn't mean anything.

BenjaminClarke

Pixie5740 wrote: »

Your credit score doesn't matter. Lenders don't use them, they actually use the information in your credit file. The CRA don't lend money so the fact that one them rate you as excellent doesn't mean anything.

Yep, I get that. But the fact Tesco Bank searched my file will have a bearing when we apply with another lender... will it not?

Pixie5740

BenjaminClarke wrote: »

Yep, I get that. But the fact Tesco Bank searched my file will have a bearing when we apply with another lender... will it not?

Then stop talking about your excellent credit score. One search on your credit file isn't going to make that much of a difference to lenders. Your £5k of credit card debt and how you manage that as well as your affordability will be much more important.

Do you really need a loan? Couldn't you just snowball your credit card debts rather than just shifting your debt from one creditor to another?