Accept loan offer or apply for another?

markfaulkneruk

Hello all,

I'm writing this on behalf of my brother, who has chronic pain in both arms (very painful for him to use a computer) is a carer for his disabled wife and works full-time and has a young daughter - so constantly snowed under, poor guy. Just trying to take some load off him.....


I'd be very grateful for some advice on his loan search situation, please:

1. Today he applied for a loan online (through a comparison site) with Clydesdale Bank for £10,000, with an indicative rate of 3%. The loan is to get a new car (his previous one is completely dead and he's having to hire one for now)

2. They accepted the request but it came back at 5.7% instead of 3% - I know this can happen, that's not the issue

3. This rate puts him over budget and he wants to try apply somewhere else for a better deal. It's the only application he's made for a loan for several years. The bank confirmed they had recorded the application against his credit history


So the questions are:
A) Would it theoretically be possible for him to get a lower rate or will a second application this soon be too negative for him?

His mortgage renewal is due in about 3-4 months, and he doesn't want to put that at risk in any way (says "he'd rather go without a car")

Edit: removed question C




Here's his financial situation:
- Single earner, on about £70,000 gross PA
- Wife on Disability Benefits
- Co-own their home with the Council but have about 15% equity now
- Credit rating check was at the highest level (I know this is only indicative and each lender can do things differently)
- He's done all the right things like be on the Electoral Roll, no missed payments, etc etc
- No other debts apart from the mortgage



Thanks very much! Mark




P.S. I didn't create my inane signature and I can't remove it from my account.

[Deleted User]

He should at least try one more application if he's serious about the loan. He doesn't need a broker to find a loan.

But if he's due to remortgage, he'd be mad to take on more debt now.

DCFC79

Forget option c.

markfaulkneruk

Deleted_User wrote: »

He should at least try one more application. He doesn't need a broker to find a loan.

But if he's due to remortgage, he'd be mad to take on more debt now.

Thanks

I know what you mean. The other options are to have no car (but his wife is wheelchair bound and he has a young child) or to keep renting hire cars. So no happy solution, sadly.

[Deleted User]

Can he scrape together£500 to buy something? That's the only sensible option.

And if he can't, he'll have trouble when it comes to remortgaging.

markfaulkneruk

Deleted_User wrote: »

Can he scrape together£500 to buy something? That's the only sensible option.

And if he can't, he'll have trouble when it comes to remortgaging.

I guess he could also lease a car.

And I'll see if anyone in our family can help him out in some way.....

Thanks again for replying - much appreciated.

foxy-stoat

Maybe fix his mortgage as early as he can with his current lender, they should be able to do this over the phone and without credit checks.

Not sure if I would be borrowing £10,000 for a £10,000 car, (if its was for 5 years) when £11.76 tips me over my budget.

markfaulkneruk

foxy-stoat wrote: »

Maybe fix his mortgage as early as he can with his current lender, they should be able to do this over the phone and without credit checks.

Not sure if I would be borrowing £10,000 for a £10,000 car, (if its was for 5 years) when £11.76 tips me over my budget.

Good point about potentially doing something on the mortgage earlier. Thanks.

RE: This loan: He can afford the 5.7% loan but is trying to keep costs down as low as possible to maximise his contingency / buffer. When two people in the household have chronic conditions you need to have as much buffer as possible for things going wrong (medical bills, etc)

glennstar

If we park the whys and wherefores of affordability and how sensible this is - zx81 and DCFC79 make their usual insightful comments on that front - but look at a technical aspect...

The offer from Clydesdale Bank should have been on the basis of a quotation or soft search so no record of it (until he accepts the loan) will appear to other lenders until it is converted into a hard search... so asking more than one party at this stage will not have an affect on his credit history.

boo_star

glennstar wrote: »

If we park the whys and wherefores of affordability and how sensible this is - zx81 and DCFC79 make their usual insightful comments on that front - but look at a technical aspect...

The offer from Clydesdale Bank should have been on the basis of a quotation or soft search so no record of it (until he accepts the loan) will appear to other lenders until it is converted into a hard search... so asking more than one party at this stage will not have an affect on his credit history.

There's no reason why the Clydesdale application would be "on the basis of a quotation or soft search" and indeed it doesn't appear to have been.

Plenty of lenders don't do "quotations" and will only take applications. Clydesdale appear to be one of them.

glennstar

boo_star wrote: »

There's no reason why the Clydesdale application would be "on the basis of a quotation or soft search" and indeed it doesn't appear to have been.

Plenty of lenders don't do "quotations" and will only take applications. Clydesdale appear to be one of them.

Hey Boo!
You may well be right, and it's probably worth highlighting companies that do not conform to the Principles of Reciprocity which clearly states that any search to establish risk based pricing - which is the case here - should be subject to quotation search. If the UK subprime lenders have universally managed to do this, then the likes of Clydesdale Bank certainly should. It's completely irresponsible for them not to.