Question about APR% (the other 49%) and Loan reasons

[Deleted User]

Hi there,

I'm a bit of a loan newbie and was wondering if anyone could help with the following queries:

Does the reason for your loan (ie. home improvements, vehicle purchase) have an effect on whether you will be accepted and your APR %? I'm looking to get a £9k loan for cosmetic surgery & tattoo removal, and I've noticed that there is rarely a 'medical' option. Does this increase my chances of being rejected?

And as for representative APR, I understand that 51% will get the rate quoted and the other 49% will get another rate. Do you know if there is a limit to the other percentage? (ie. I can't imagine someone getting accepted for a loan with 100% APR. Is there generally a percentage point they don't cross?)

Thanks for the help!

Zoot

PeacefulWaters

Loan purpose is part of the credit scoring process so does impact acceptance and APR. What you don't know is how an individual lender will score different loan purposes.

There is no specific cap on the rate you are offered if you don't get the headline rate.

forgotmyname

Zoot_Zoot wrote: »

Do you know if there is a limit to the other percentage? (ie. I can't imagine someone getting accepted for a loan with 100% APR. Is there generally a percentage point they don't cross?)


Zoot

I have had leaflets through the door offering loans at 400%+

Unlikely from a bank offering low rates though, but the low end that offer loans to people that cannot get one elsewhere.

antrobus

Zoot_Zoot wrote: »

..... Do you know if there is a limit to the other percentage? (ie. I can't imagine someone getting accepted for a loan with 100% APR. Is there generally a percentage point they don't cross?) ...

Not really.

Quick Quid representative APR is 1294%.

Pixie5740

Every lender has their own way of scoring you (which they don't publicise) so what might make you a greater risk to one lender might not be so much of an issue for another lender. Likewise the maximum APR a high street lender (I'm ignoring the pay day lenders and door step lenders) would consider offering before just flat out rejecting you will vary from lender to lender. I think I read on HSBC's website that the maximum APR they would offer a successful applicant was something like 21.9%.

I'm just guessing here but I think high street lenders would offer the other 49% rates up to 30% APR. I think if you were deemed riskier than that they would just reject your application.

If it's tattoo removal and cosmetic surgery you want to use the money for then some companies who offer those services also offer finance. Sometimes that finance is at 0% so that might be worth investigating.

DCFC79

A question to be asked is the money you would use to repay the loan what have you done with it ? Is it saved up ?