Offered 15.9% by Santander (hoping for 3.1%) WWYD?!

sunflower_lass

Hello moneysaving friends!

I've just applied for my first loan of £11,000 to buy a new Car, with my own bank Santander. I've banked with them for over 15 years.

I earn £28,000. I own my home outright. Outgoings £1100/month.

I was offered 15.9% APR! Owch. Definitely not going to take them up on that offer...

Could anyone help me decide what to do next?

Do I ask another lender?
Do i ask for less - £7500 would probably be ok.

Thanks all

[Deleted User]

If you're not prepared to accept that rate, then yes, try elsewhere.

Be prepared not to get the headline rate again though - 11k is a big ask on your salary. Do you not have any savings you could use, and then rebuild?

Check also to see the amounts are which rates change for each lender. Also consider a soft search to see where best to apply. Generally, the least competitive place to apply for a loan is always 'your own bank'.

Oakdene

Use the MSE loan eligibility calculator to see which banks are likely to accept you.

Wookey

Surely the car dealer will have a few finance packages in place?

dirtycredit

You might as well get a credit card.. Barclaycard do big limits and at least you get an interest free period of about two years for purchases!

sunflower_lass

Thanks for the advice so far folks

I did the moneysavingexpert eligibility calculator as suggested, which said Hitachi would give me a 95% chance of acceptance. So I applied for £10k with them... and they've offered 10.5%! Still no way near a reasonable rate

My one weakness is that I don't have much debt history - I have one credit card that I barely use.

Should I reapply for less money? £7k maybe?
Should I wait a while and use my credit card more, to build up credit history?

Any and all advice greatly appreciated :beer:

sammyjammy

Do you need a brand new £11k car?

john1002

You have two credit searches now and a rough idea the interest your likely to get, I would try nationwide and there soft search application, this way you will have a good idea of rate, if it's better than your approved ones then go for this.

You have positives on your credit file and circumstances but your lack of history of managing credit is why your getting those higher rates.

Carrying on applying will lead to declines due to excessive searches if your not careful.

Let us know how you get on with nationwide. Oh another option would be Zopa as they also do a soft search option, these soft searches won't impact your credit file.

John

fozmcfc

£1,100 monthly outgoings, when paying a mortgage, is reasonable, but considering you have no mortgage, that is a lot.

Obviously, you may be paying into some saving accounts or investments and not spending it on expensive luxuries, but adding the monthly payment for an 11k loan, onto your outgoings, would suggest, you are an affordability risk on 28k.

Tammykitty

fozmcfc wrote: »

£1,100 monthly outgoings, when paying a mortgage, is reasonable, but considering you have no mortgage, that is a lot.

Obviously, you may be paying into some saving accounts or investments and not spending it on expensive luxuries, but adding the monthly payment for an 11k loan, onto your outgoings, would suggest, you are an affordability risk on 28k.

OP earns £28k a year - about £22k net and has £1,000 outgoings a month (£13k a year) - this gives £9k a year or £750 a month to spend


The outgoings probably include food, bills, current car costs etc so the £750 is actually "fun" money!


OP - what do you currently do with the £9k a year not spent on outgoings?


If you need a car, buy an old banger for a year, save and buy next year

20aday

Is there a particular reason you'd like to spend £11k on a new car OP?

I'm not criticising you but it's an awful lot of money bearing in mind you'd still be liable for any repayments if the car was written off AND any insurance payout would be lower than the amount you paid at the forecourt.

To me it sounds as if your credit history is limited hence the higher APR figures being quoted to you.