Advice for first time loan.

ragj78

Hi,
I was looking to loan approximately £4500-5000. This is the first time I have ever needed to borrow a large amount of money, so apologies if I sound a little naive. I have a very good credit rating and should be able to pay it off relatively quickly in 1-2 years. After a search on the very helpful Credit Club, I have noticed APR goes down significantly when I go over £5000. My best rate seems to be 2.8% APR with Ratesetter with a 90% chance of being approved. So a few questions-

I should be able able to pay the loan off in a year, but I might be better off doing it in 2-3 years to put less pressure on me. Is there a penalty for paying off a loan early if I were to do that? Is it possible to extend a loan? Would it be cheaper to borrow just over £5000 even if I only needed 4700?

Are 'Ratesetter' OK? I believe they are P2P. Is the chance of getting approved accurate and would it harm my credit rating if I was declined? How long does it usually take to process a loan?

I also have read that to get effectively a 0% loan for a short period of time would be through a balance transfer on to a credit card with an introductory offer. Is this a possibility or is it only possible for paying off existing debt?

Sorry for so many questions and thanks in advance if you are kind enough to reply.

DrEskimo

What is the loan for? If you can purchase it with a credit card you could apply for a 0% purchase credit card and buy it using that. A 0% balance transfer card would work as well.

Of course you could avoid using any of these and simply wait and save for a year and then buy it with the money you've saved.

DCFC79

Your credit rating is only seen by and only you.
Your history is whats important as lenders see it.
Nothing wrong with Ratesetter.

All thats recorded is a search was carried out, a decline isn't listed. What will have an effect is if you make 4 or 5 applications in quick succession, a second application shoukd be fine but a third Im not so sure.

Yes the apr does reduce if you borrow more and you can always make a one off payment if the lender allows it.

MallyGirl

ragj78 said:

Hi,
I was looking to loan borrow approximately £4500-5000. This is the first time I have ever needed to borrow a large amount of money, so apologies if I sound a little naïve. I have a very good credit rating and should be able to pay it off relatively quickly in 1-2 years. After a search on the very helpful Credit Club, I have noticed APR goes down significantly when I go over £5000. My best rate seems to be 2.8% APR with Ratesetter with a 90% chance of being approved. So a few questions-
I should be able able to pay the loan off in a year, but I might be better off doing it in 2-3 years to put less pressure on me. Is there a penalty for paying off a loan early if I were to do that?

There is usually a penalty of 2 months interest to repay early but you are likely to save more than that in future interest - just don't pay early with a month to go. That being said, you shouldn't go too easy on yourself - it is a good habit to get into to pay back as quickly as you can and not just coast along. Something else may come up that you need money for and it won't be an option if you have the first loan dragging on.

Is it possible to extend a loan?

rarely a good idea - terms& conditions, rates etc can change. Better to throw everything at paying it off within the time.

Would it be cheaper to borrow just over £5000 even if I only needed 4700?

Probably. Just don't fritter it away.

Are 'Ratesetter' OK? I believe they are P2P. Is the chance of getting approved accurate and would it harm my credit rating if I was declined? How long does it usually take to process a loan?
I also have read that to get effectively a 0% loan for a short period of time would be through a balance transfer on to a credit card with an introductory offer. Is this a possibility or is it only possible for paying off existing debt?

A balance transfer is to transfer an existing balance from a credit card to a new credit card. Is that what you need the money for?

Sorry for so many questions and thanks in advance if you are kind enough to reply.