Personal Loan for a car. Do I have a better chance with my own bank?

GaryG

I am looking to take out a personal loan for the purchase of a new car. My own bank coincidently is offering the lowest interest rate that I can find. But, do I have any better chance of being accepted by them, compared to other companies?

foxy-stoat

Not really no, if you have 5 missed payments say then you are as unlikely as being accepted by your own bank or any other.

Apply and and see what your interest rate is going to be.

GaryG

I have no missed payment history and my credit score is "Excellent" and higher than the UK average.

The reason I am reluctant to just apply and see what happens, because any failed application will impact on my credit score.

foxy-stoat

The credit score you speak of is only seen by you.
The credit search is the only thing that appears on your credit file.

PRAISETHESUN

As above - your score is meaningless, as is any comparison to the "national average". Lenders use the data on your credit files to measure you against their own internal criteria, not some magic number provided by a third party. Having no missed payments is the generally the sort of thing that lenders look for though, so you're probably in for a decent shot provided you don't have an excessive amount of other available credit - I'd recommend using an eligibility checker before you commit to anything though.

Your chance at success will depend on how well you fit their acceptance criteria. Generally, people seem to report more success applying for products from the bank they use for their day to day spending as they usually have a better picture of the risk you represent, but you won't know for sure until you apply.

Also to note, a single hard search in isolation will matter little to your credit history, and the impact will become increasingly less important over time. The main issue comes from multiple searches in rapid succession - if you apply and are rejected, wait 2-3 months before trying again to avoid as being seen as desperate by lenders.

GaryG

Thanks for the replies. I applied to my bank and got accepted. They are sending out the agreement for me to sign.

Although I am intrigued by the idea that credit scores are meaningless. if they are meaningless, why do they exist?

PRAISETHESUN

GaryG said:

Thanks for the replies. I applied to my bank and got accepted. They are sending out the agreement for me to sign.

Although I am intrigued by the idea that credit scores are meaningless. if they are meaningless, why do they exist?

They are primarily marketing tools for the CRAs - they seem to have equated good creditworthiness with a good credit score in the minds of the public, which isn't always true. The classic example on the forums is ex-bankrupts with 999 Experian scores - on paper they are perfect but in practice no lender will touch them. Lenders do not see these numbers nor use them in any of their assessments so they are basically meaningless in any sort of situation where they are used as a metric of creditworthiness.

Instead the focus is on the underlying data on your credit reports. So long as your accounts are in good standing, with no missed payments, modest limits in relation to income and relatively few credit applications over the preceding months, then you're generally in a good place if you want to apply for future credit, although as always it's down to how well you fit the criteria of the lender you are applying to.

onlyfoolsandparking

So what interest rate did you get?