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To loan or not to loan!
I am the world's worst saver and I need to repay a friend some money, plus have a wedding and home improvements to do. I would never take out a loan that was unnecessary or unaffordable but If I look at taking a loan out (over 5 years) to just repay my friend the rates available to me are 18%apr and more but if I look at taking a higher loan over 7 years it drops to between 8/10%apr!
Why is that?
I have also worked hard to get my credit rating back up to excellent and yet I still get rubbish rates!
Any advice would be greatly received.
Why is that?
I have also worked hard to get my credit rating back up to excellent and yet I still get rubbish rates!
Any advice would be greatly received.
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Comments
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These are high rates.
Give us a clue on amount and how that relates to income. Is this a personal loan?
Under £7500 on a personal loan is usually more expensive. Rates are cheaper at £7500 to £15k.0 -
JK25 said:
I have also worked hard to get my credit rating back up to excellent and yet I still get rubbish rates!Yet again, proof that your "rating" as defined by the CRAs is a load of codswallop.The high rates you've been quoted are quite likely to be because you're looking to borrow (or already owe) a high sum in relation to your income. It's worth checking all 3 credit files to make sure there's nothing amiss, but I would hazard a guess that it's simply affordability.I would also question the wisdom of taking out a loan for a wedding. Spending the first few years of married life in debt, just for the sake of a big party? Save up, or have a more modest ceremony, there really is no need to be spending thousands on a wedding. Likewise with the home improvements - are they absolutely essential, or can you do things bit by bit as and when you've saved up the money? If you did take out a loan, that's money every month that you'd HAVE to be repaying. If you can afford the repayments, why haven't you been saving a similar amount every month for the past couple of years? Particularly for the wedding, which I assume has been planned for some time.
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The high rates you've been quoted are quite likely to be because you're looking to borrow (or already owe) a high sum in relation to your income.
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JK25 said:I am the world's worst saver and I need to repay a friend some money, plus have a wedding and home improvements to do.JK25 said:I would never take out a loan that was unnecessary or unaffordable10
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JK25 said:I am the world's worst saver and I need to repay a friend some money, plus have a wedding and home improvements to do. I would never take out a loan that was unnecessary or unaffordable but If I look at taking a loan out (over 5 years) to just repay my friend the rates available to me are 18%apr and more but if I look at taking a higher loan over 7 years it drops to between 8/10%apr!
Why is that?
I have also worked hard to get my credit rating back up to excellent and yet I still get rubbish rates!
Any advice would be greatly received.
Don't take out a loan.
Don't take out a credit card.
Repay your friend what you can reasonably afford to out of your benefits / wages / salary each time you are paid until you have cleared your debt to them.
Then start saving for your wedding. Plan your budget. Plan your wedding realistically.
If you want more money, earn more.
Take a second job, do evening classes to increase your worth and apply for better jobs, whatever it takes.1 -
The OP is considering borrowing to pay for their wedding plus improvements to, presumably, the intended marital home. This type of finance discussion would be better with the OP's intended betrothed than a group of internet strangers. Starting out married life with ghosts hidden in the financial closet does not bode well.1
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JK25 said:I am the world's worst saver and I need to repay a friend some money, plus have a wedding and home improvements to do. I would never take out a loan that was unnecessary or unaffordable but If I look at taking a loan out (over 5 years) to just repay my friend the rates available to me are 18%apr and more but if I look at taking a higher loan over 7 years it drops to between 8/10%apr!
Why is that?
I have also worked hard to get my credit rating back up to excellent and yet I still get rubbish rates!
Any advice would be greatly received.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
The OP may not come back to this thread because some of the comments are absolutely brutal. They are, however, both true and probably well meaning.
OP - you can usually (check the T's & C's) pay a loan back faster, so if borrowing more (e.g. over the 7.5k threshold mentioned) for more time gets a lower rate, do that and then pay it back, rather than suffering a higher interest rate. However, not borrowing will see you pay even less interest. There are also 0% credit cards, which if used well can be a good option.
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FaceHead said:The OP may not come back to this thread because some of the comments are absolutely brutal. They are, however, both true and probably well meaning.
OP - you can usually (check the T's & C's) pay a loan back faster, so if borrowing more (e.g. over the 7.5k threshold mentioned) for more time gets a lower rate, do that and then pay it back, rather than suffering a higher interest rate. However, not borrowing will see you pay even less interest. There are also 0% credit cards, which if used well can be a good option.
OP - have you looked at an MBNA credit card? These provide 0% money transfers into your current account. They'll tell you how much they're willing to lend at pre-application stage on their website. This is the kind of card FaceHead is referring to.1 -
FaceHead said:The OP may not come back to this thread because some of the comments are absolutely brutal. They are, however, both true and probably well meaning.
OP - you can usually (check the T's & C's) pay a loan back faster, so if borrowing more (e.g. over the 7.5k threshold mentioned) for more time gets a lower rate, do that and then pay it back, rather than suffering a higher interest rate. However, not borrowing will see you pay even less interest. There are also 0% credit cards, which if used well can be a good option.0
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