Apr on personal loan

Gj1997

Hey folks, I've been looking into getting a personal loan of £9500 to buy a car from a private seller, I went into the bank and after enquiring I was told that the APR would be 14.9% with natwest. Payments would be 220.90 per month for 5 years. which is high considering that I've paid two loans back early in the past 4 years, I've had phones on contract and I use a credit card which I have never missed a payment on, everyone I speak to said this is high, my credit score is 819 out of 999 so its not bad. And I easily earn enough to pay the loan back as I have proven before. Why is it so high and is there any advice anyone can give me.

Gaz83

It's so high because you don't fit that particular lender's risk profile of the ideal customer.

Ignore the credit score. They're meaningless. Lenders look at your file, not the made-up score.

Gaz83

Also: they could be offering you a higher APR because you have a history of paying loans back early.

DCFC79

Who was the lender ?


Id try another lender, 2 at max.

Gj1997

I'm just doing soft checks at the minute and the lender was natwest. Surely paying money back early is a good thing?

Gaz83

Gj1997 wrote: »

I'm just doing soft checks at the minute and the lender was natwest. Surely paying money back early is a good thing?

Not necessarily.

When you apply for a loan, a lender will set an APR based on your risk profile whilst factoring in a reasonable rate of return (i.e. profit) for themselves, taking into account the loan's setup costs.

Paying a loan back early means they don't receive their expected return, as you save interest.

If you have a history of repaying loans early, perhaps they are offering you a higher rate as they expect you will repay this one back early as well, and a lower APR means they wouldn't receive their desired profit.

Gj1997

Ahh okay that makes sense.

Craig1981

other soft searches to try for a loan - Zopa and nationwide - when i was shopping around, they offered me around 7% - ultimately went with an application with tesco through clubcard - was approved for 4.9...

as said above though, try not do more than 2 hard searches in a small space of time

as a personal opinion - 9.5k on a private car seems (to me anyway) risky. a lot of money with no comeback if anything wrong with the car... at that amount, i would be making sure AA or RAC do a full vehicle inspection prior to purchase, for peace of mind

Gj1997

Yeah it's from a bloke at work and it's only done 24 thousand miles, I'm a car man myself so I know what's what.

foxy-stoat

Gj1997 wrote: »

Yeah it's from a bloke at work and it's only done 24 thousand miles, I'm a car man myself so I know what's what.

Sounds perfect. Try another lender or two and see if you get offered anything better. If you dont then just take out the loan as you will probably pay it back early anyway saving you some interest so the initial rate shouldnt make that much difference.