Post Office Loan Interest Rate

DrG78

Hi All,

Recently applied for a PO loan as the interest rate seemed competitive in the current market!  Initially did a 'soft search' and it gave me a 9.9/10 chance of getting a interest rate at 5% for loan.  On that basis I completed a full application and at was offered a loan at 10% interest rate.  Obviously, this rate is very poor and the fact that this is a 'hard search' it will impact my credit score as a consequence and reduce the likelyhood of successfully getting a loan with a good rate.

Just prior to applying for this loan I also did a soft search with Sainsburys which gave me a quote at 9.9 APR, and therefore I didn't apply. Why didn't the PO do this? Anyone had a similar experience, appreciate any feedback.

MorningcoffeeIV

PO didn't do it because they have a lower headline rate. It's just too low for you to be accepted because of your risk.

Lots have similar experiences and they too worry about the credit score for no good reasons. One search is not an issue.

Ebe_Scrooge

As above.  The rate you're offered will only be confirmed once a hard search has been performed, there's no other way it could be.

And also to reiterate the above - your score is utterly meaningless, and one search is neither here nor there.  Check all 3 of your credit files - ignore the scores, but just make sure there's nothing untoward on them.  But if you're getting turned down for loans at a reasonable rate, the prudent option would be to forget about it for a while and save up for whatever it is you want to buy.

If you have a "thin" credit file, this can be almost as bad as having a bad credit file.  If you don't have any other credit products, then correct use of a credit-builder credit card can help to start building a favourable history.

DrG78

Thanks all.  I did notice since that only 51% of appplicants need to be offered the 5% representative interest rate. My experian score is 999 with perfect history and wanted to keep it that way so hopefully no issue.  I just was looking for a sensible option of funding a new car rather than digging into savings or paying manufacturer/dealer interest rates, I always find these to be daylight robbery!

Ebe_Scrooge

DrG78 said:

Thanks all.  I did notice since that only 51% of appplicants need to be offered the 5% representative interest rate. My experian score is 999 with perfect history and wanted to keep it that way so hopefully no issue.  I just was looking for a sensible option of funding a new car rather than digging into savings or paying manufacturer/dealer interest rates, I always find these to be daylight robbery!

Your Experian score is of no consequence whatsoever.  It's not used - nor even seen - by any lender.  And you're correct in that only 51% of successful applicants have to be offered the "representative" APR.

For what it's worth, the general consensus is that buying a car should be funded from savings wherever possible.  It really doesn't make sense to take out a loan on a depreciating asset.

But in terms of your credit history, there's no need to worry.  A single search is nothing to be concerned about.  It's only when you've got loads of searches in a short space of time that it becomes an issue (makes you look like you're desperate for credit).  Your score will almost certainly drop in response to the search, but that matters not one jot.  If you want a few extra points, I'm happy to give you some of mine