Reason for Loan

Larry9999

Hi all,

I've got a post office loan which i've had for 8 months for £7000 and want to know if i could top it up to raise another £2000 as i've booked a holiday which i normally pay for monthly but i've had some financial things crop up so this means that i will struggle to get enough money together for spending money so they said they don't do "top ups" but i'd have to apply for a new loan and then obviously pay off the existing one.
I've gone on and it's stated that the APR will be as low as 3.1% and i went through the application form and it then went up to 11.9% ? I only have the one loan and no other debts and my credit score on Experian is 992 so i'm not sure what's made it jump up however when i applied for the "new" loan i put the reason down as holiday as opposed to debt consolidation so would this have affected it thinking i'd then have a loan total of £16000 (i.e the 7000 and 9000) as opposed to just the one loan of £9000 if this makes sense ?
Thanks

[Deleted User]

You're carrying a lot of debt, you're asking for even more and your credit score isn't used in lending.

You could try elsewhere, buy you're looking like a high risk borrower.

Failing that, just cut back on the holiday spending a little.

Larry9999

So you're saying that YES the fact i've applied for this as an addition holiday loan by mistake (as opposed to a consolidation loan) would've pushed the APR up ?

[Deleted User]

No.

I'm saying that you're getting a higher rate because you're asking to more than double your indebtedness.

Putting consolidation would have likely increased the rate even more.

Larry9999

mmmm....that's what i don't understand then ?
I've already got a loan for £7000 so i want to get a new loan for £9000 and then pay the £7000 off to give me £2000 cash (so in all i would owe £9000) so that would give me a higher rate than having a £7000 loan AND a £9000 loan ? (so in all i would owe £16000) ? How is that right ?

foxy-stoat

Larry9999 wrote: »

mmmm....that's what i don't understand then ?
I've already got a loan for £7000 so i want to get a new loan for £9000 and then pay the £7000 off to give me £2000 cash (so in all i would owe £9000) so that would give me a higher rate than having a £7000 loan AND a £9000 loan ? (so in all i would owe £16000) ? How is that right ?

The lender will have no guarantee that you will pay the first loan off....also the main reason for borrowing more is to consolidate.

Your better off getting a credit card for your holiday or better yet, save.

DCFC79

Larry9999 wrote: »

mmmm....that's what i don't understand then ?
I've already got a loan for £7000 so i want to get a new loan for £9000 and then pay the £7000 off to give me £2000 cash (so in all i would owe £9000) so that would give me a higher rate than having a £7000 loan AND a £9000 loan ? (so in all i would owe £16000) ? How is that right ?

Its a higher risk for them, theres no guarantee you will use the £9k as you plan.


How much is the holiday ?


What are these financial things that have cropped up ?

Exodi

As has been echoed above, lenders can't guarantee you'll use extra loans for consolidation and so assess you as if you will be indebted by both.

Your plan also sounds like a recipe for disaster. You can't afford to save for the holiday monthly due to other financial commitments so you intend to get a loan (presumably over a lengthy period as otherwise these two statements contradict each other). Do you absolutely have to go on holiday? Can't you wait till these 'financial things that have cropped up' are at least sorted?

Also to save everyone else the time:

a) The score on Experian isn't seen by lenders, only your credit history is. The scores also tend to be as accurate as my partner is when she tells me how long it will be till she's ready to go out.

b) Regardless of the 'reason' for the loan, all lenders will assess on having both debts.

c) Being offered 11.9% from 3.1% indicates banks don't think you're as financially stable as you seem to think you are.

dresdendave

You won't go far wrong if you borrow money to buy a house and perhaps for home improvements, possibly a car but at a sensible price but never borrow for holidays or weddings.