Fixed sum loan agreement, creditor changing interest rate

directselect

hi guys, first post so bare with... 
So I'm currently buying a bike on finance for the first times a little unsure of the process, cash price of about 4.5k and the bike company sent a fixed loan sum agreement through (1.2% APR ), which I signed, scanned and returned. 

They replied with "oh santander aren't happy with the form" and then resent the forms for me to submit again.

These forms came back and the interest rate had gone up from 1.2% to 12.9%... so going from paying £180 for the loan to £1200... 

Do I have a leg to stand on where they have to honour their agreement for the original APR considering I have signed the form etc? 

Appreciate your responses 
Matt 

[Deleted User]

No. 

See if you can finance it cheaper.

macman

If you signed at 1.2%, they can't change it-they can only withdraw it.

directselect

macman said:

If you signed at 1.2%, they can't change it-they can only withdraw it.

The middle man ( the bike company) has just resent the forms after saying my scans for the first forms didn't work... when I asked them about the rate they said "There was a mistake made on the first lot of paper work that was sent where the apr was wiped by Santander and put in at a wrong rate, when I tried to send you the second load of forms the clearer ones I noticed and made the change for you"

That was it 

jonesMUFCforever

Your choice - accept that there was a mistake - or look at other finance options.

onlyfoolsandparking

Hi Matt, as a fellow biker I felt obliged to answer, hope it helps and I'm not too late.
First part of your issue: unless you've never had a loan or any other type of credit you must have wondered why that rate was so low, It's impossible to get a loan of 4.5k at 1.2%apr, your revised quote of 12.9.% sounds 'about' right although it's not a great rate.

 For the amount your borrowing you should be looking to get a rate around 8.5-9% and not using the dealer you might get that, as I said hope It's not too late. Also there is something else to consider, IF you borrow 5k instead you COULD? get that at around 3.5%apr. Of course this is all dependant on your credit worthiness but worth considering borrowing an extra £500 at a much better rate, then just make a £500 overpayment, potentially save even more.

 I've recently bought a new BMW S1000R for £13000, financed £5000 of it and it's only costing me £200 in interest on that £5k so definitely worth you doing a bit more homework, good luck whatever you decide.    

MinuteNoodles

onlyfoolsandparking said:

 It's impossible to get a loan of 4.5k at 1.2%apr,

No it isn't. The vast majority of stuff sold by DFS, SCS etc for that and less is done with loans with a 0% APR, Barclays Partner Finance being a common lender. Given you can get loans to purchase stuff at 0% APR it follows then that it is possible to borrow at anything above that.

directselect

Thanks for the replies guys, I'm not trying to chance my arm more just naive and uneducated about this topic so thought it be worth an ask to learn a bit more. 

Just going to leave it, as was only specifically going with that shop because of the bike, but will probably loan from bank instead at a slightly lower APR, or just finally get rid of some toys ha 

Thrugelmir

MinuteNoodles said:

onlyfoolsandparking said:

 It's impossible to get a loan of 4.5k at 1.2%apr,

No it isn't. The vast majority of stuff sold by DFS, SCS etc for that and less is done with loans with a 0% APR, 

Because the interest margin is built into the selling price of the product. A sofa for example costs very little to manufacture. 0% is offered to make sizable bulk purchases manageable. No such thing as a free lunch. A marketing tool that's as old as the hills. 

onlyfoolsandparking

MinuteNoodles said:

onlyfoolsandparking said:

 It's impossible to get a loan of 4.5k at 1.2%apr,

No it isn't. The vast majority of stuff sold by DFS, SCS etc for that and less is done with loans with a 0% APR, Barclays Partner Finance being a common lender. Given you can get loans to purchase stuff at 0% APR it follows then that it is possible to borrow at anything above that.

Please tell me your joking? I thought (wrongly it would appear) that everyone knew that these 0%apr 'deals' from these companies you mention are nothing more than a paper exercise and don't come anywhere near 0% when you factor in the true cost.

In the interest of fairness though I was actually talking about CASH loans, you tell me where I can get a CASH loan at 0%apr and I'll buy the OP,s bike for him and gift wrap it too,lol


Thanks @Thrugelmir for explaining the obvious to @MinuteNoodles