How do I get the best possible personal loan interest rate?

LaHostessAvecLaMostess

Quantum912 said:

Hi all,

Just a thanks and an update.

I applied to HSBC for a £15K loan, as I've had various accounts with them for over 40 years. Their loyalty to me was an offer at 5.9% which I immediately declined. This left a mark on my credit file, so I was dubious about any further applications with other lenders.

I next applied to Tesco Bank for the same amount and was pleasantly surprised with an offer at 2.8% which I accepted and got the money paid in my HSBC bank account within a couple of days. The difference saves me £20 per month or £1200 total over the HSBC loan for its duration.

Shop around as best you can and don't take the first offers you get.

Frank.

That's fairly bad advice.

You can't really "shop around" for credit as every application will leave a hard search and, realistically, going past two of these in 6 months will either hurt your acceptance chances or the rate you're offered.

That being said my general advice would be to not go to your bank unless they're offering a headline rate.  They may know you, but that can work against you.

Silvertabby

LaHostessAvecLaMostess said:

Quantum912 said:

Hi all,

Just a thanks and an update.

I applied to HSBC for a £15K loan, as I've had various accounts with them for over 40 years. Their loyalty to me was an offer at 5.9% which I immediately declined. This left a mark on my credit file, so I was dubious about any further applications with other lenders.

I next applied to Tesco Bank for the same amount and was pleasantly surprised with an offer at 2.8% which I accepted and got the money paid in my HSBC bank account within a couple of days. The difference saves me £20 per month or £1200 total over the HSBC loan for its duration.

Shop around as best you can and don't take the first offers you get.

Frank.

That's fairly bad advice.

You can't really "shop around" for credit as every application will leave a hard search and, realistically, going past two of these in 6 months will either hurt your acceptance chances or the rate you're offered.

That being said my general advice would be to not go to your bank unless they're offering a headline rate.  They may know you, but that can work against you.

Not always.  Very much like the OP, we are retired, mortgage free and have over £30K of available credit on 2 cash back credit cards (which are always paid in full each month).

When we wanted £12K for a car loan last year, our first and only request was to our bank, on the basis that they could see our ins and outs every month.  Got the minimum 2.8% in less than an hour.

Quantum912

Comments noted.

The first place I tried as a "toe in the water" left a "soft" search on my file (May have been Sainsbury's bank but I can't remember), but the rate wasn't acceptable so I tried my bank next.

Maybe I was lucky with the Tesco application, but HSBC were advertising the headline rate of 2.9% from memory, so that's why I tried them as they had visibility of all our incomings and outgoings. It's interesting about the 2 applications within a 6 month period comment because that was the sort of info that could have been useful before I started the process.

Anyway, I suppose it's up to each individual knowing their specific circumstances to work out which lender they try bearing in mind rejected offers could harm future applications. It all seems a bit of a lottery really though.

LaHostessAvecLaMostess

Silvertabby said:

LaHostessAvecLaMostess said:

Quantum912 said:

Hi all,

Just a thanks and an update.

I applied to HSBC for a £15K loan, as I've had various accounts with them for over 40 years. Their loyalty to me was an offer at 5.9% which I immediately declined. This left a mark on my credit file, so I was dubious about any further applications with other lenders.

I next applied to Tesco Bank for the same amount and was pleasantly surprised with an offer at 2.8% which I accepted and got the money paid in my HSBC bank account within a couple of days. The difference saves me £20 per month or £1200 total over the HSBC loan for its duration.

Shop around as best you can and don't take the first offers you get.

Frank.

That's fairly bad advice.

You can't really "shop around" for credit as every application will leave a hard search and, realistically, going past two of these in 6 months will either hurt your acceptance chances or the rate you're offered.

That being said my general advice would be to not go to your bank unless they're offering a headline rate.  They may know you, but that can work against you.

Not always.  Very much like the OP, we are retired, mortgage free and have over £30K of available credit on 2 cash back credit cards (which are always paid in full each month).

When we wanted £12K for a car loan last year, our first and only request was to our bank, on the basis that they could see our ins and outs every month.  Got the minimum 2.8% in less than an hour.

I'm sure it works for some but it can absolutely work against you.  Knowing more about your finances is a double-edged sword, and you don't exactly know what criteria the bank is going to penalise you on (and I can assure you it's a lot more than whether you've gone overdrawn or had payments bounced.)

As I said, "speak to your bank" is often not good advice, especially as they may not be offering the best rates anyway.