new loan advice

elastic

my son has £400 remaining on his current Natwest loan. He is looking to borrow £15,000 and can clear the £400 if it helps. Natwest have suggested consolidating the current balance over 5 years at a monthly cost of £387 with a total repayment of £23,000. This sounds rather high to me. Could you lovely people please advise us!

MallyGirl

By my calculations that is an APR of 20.4%

That is really high for a loan. If he has poor or little credit history then maybe he should set his sights a little lower on whatever he was going to buy for £15,000

If he can clear the £400 there is no point spreading it over a further 5 years and paying 5 years worth of interest on it.

Herzlos

You're likely best clearing the £400 but be careful about any early repayment charges, as it might be best to just let it run out.

That sounds fairly high, what APR are the offering? What's the £15k for?

elastic

it's for a bigger house boat as the one he lives on is now too small. He has had some mobile phone contract problems as someone took advantage of him, but has had no issues with his current loan. Could it be that he hasn't been responsible for council tax for a couple of years, and isn't currently on the register of electors?

StopIt

elastic wrote: »

it's for a bigger house boat as the one he lives on is now too small. He has had some mobile phone contract problems as someone took advantage of him, but has had no issues with his current loan. Could it be that he hasn't been responsible for council tax for a couple of years, and isn't currently on the register of electors?

It could be that he's asking for £15k and his risk profile means that that's the interest rate he'll get from Natwest.


Has he asked any other providers/used the MSE Loan Tool?


The above issues would affect the chances of getting credit (The electoral roll issue especially), not the terms of any credit, aside from any defaults arising from the "mobile phone issues".


Tell your son to go to ClearScore, Noddle and the MSE Credit Club (All free) and check his credit files).

enthusiasticsaver

That is a horrendous interest rate and he should not take out that loan. Does he have other debt and what is his income? There may be a combination of reasons why they have given him such a poor rate and I am afraid living on a houseboat may be one of those reasons as I am not sure they would take that as a permanent address.

elastic

he has 20%chance from sainsbury, and that's the best! NW also offered £10,000 over five years for £270pm and over 3 years for £360. He earns £18,000

enthusiasticsaver

There is no way I would take out any of those loans unless it was desperately urgent. Is there any reason why he urgently needs to buy a new boat now. If he saves up £400 a month for 3 years he would have the £15000 and save himself £8000.

StopIt

elastic wrote: »

he has 20%chance from sainsbury, and that's the best! NW also offered £10,000 over five years for £270pm and over 3 years for £360. He earns £18,000

And that's why the rate is so high.


A £15k loan on £18k income is beyond most lenders affordability limits. I'm a little bit shocked your son was even offered such a high loan to begin with.


I'd be advising your son to save the £360 p/m for a year and apply for a lower amount. He'll get a better interest rate. Yes, not ideal but unless if his current house boat is sinking, it's a better option than paying 20%+ APR on a £15k loan.

Herzlos

Can you get the equivalent of a mortgage on a houseboat? You might get a better rate and longer deal on something secured on the boat.

Otherwise I'd hold off upgrading as long as possible and save the payments money.