Offered Higher APR for Loan - How does this affect another application with different lender?

EmK2016

HI

I have applied for a loan having carefully looked at the credit club affordability etc. had 95% chance of being accepted.

Applied for loan but instead of the 6.5% advertised rate, they have accepted application but offered 10.9% APR.

I was aware this could happen, but like most people, hope it doesn't and the only way to find out if to actually apply. This offer now makes a difference of around £2000 more in repayable interest which is a crazy amount.

Could someone explain how this application actually affects me making another application with a different lender to try and get a better rate before I go ahead and try another lender? I know it marks your file, but will this now stop me getting lower rates from anyone else? I can't seem to find any information on what to do if you don't get the advertised rate and don't want the increased offered rate!

Many thanks!

MorningcoffeeIV

It will just show as a search.

It's up to the next lender to decide whether they feel that impacts your risk.

On its own, on a good file, it's not an issue.

EmK2016

Thank you. I will take the risk and apply with another lender! My credit score is excellent and all the affordability calculators were coming out as good so fingers crossed.

Thank you for your reply!

MorningcoffeeIV

Your credit score isn't a factor in lending.  It's just a little fun gimmick that only you see and doesn't reflect what lenders are looking for.

th081

OP - what's the value of the loan you are looking to get?

MrFrugalFever

Also, don't take MSE Eligiblity checker or Clearscore/Credit Karma as gospel etc, go direct to the lender after using these checkers and then check with the lender directly, some will give you a guaranteed APR as part of the soft search check.

dans90

EmK2016 said:

HI

I have applied for a loan having carefully looked at the credit club affordability etc. had 95% chance of being accepted.

Applied for loan but instead of the 6.5% advertised rate, they have accepted application but offered 10.9% APR.

I was aware this could happen, but like most people, hope it doesn't and the only way to find out if to actually apply. This offer now makes a difference of around £2000 more in repayable interest which is a crazy amount.

Could someone explain how this application actually affects me making another application with a different lender to try and get a better rate before I go ahead and try another lender? I know it marks your file, but will this now stop me getting lower rates from anyone else? I can't seem to find any information on what to do if you don't get the advertised rate and don't want the increased offered rate!

Many thanks!

I have exactly the same situation (with Tesco Bank)!

95% chance of acceptance via MSE Credit Club (at 6.1% APR representative). Applied and offered a loan at 10.1%. Added £2k interest just like that. As you acknowledge, I understand this can happen but I’m inclined to look elsewhere.

Out of interest, were you successful in securing a superior rate from a different provider?

Would be very grateful if you see this and are happy to reply 😊

Nasqueron

dans90 said:

EmK2016 said:

HI

I have applied for a loan having carefully looked at the credit club affordability etc. had 95% chance of being accepted.

Applied for loan but instead of the 6.5% advertised rate, they have accepted application but offered 10.9% APR.

I was aware this could happen, but like most people, hope it doesn't and the only way to find out if to actually apply. This offer now makes a difference of around £2000 more in repayable interest which is a crazy amount.

Could someone explain how this application actually affects me making another application with a different lender to try and get a better rate before I go ahead and try another lender? I know it marks your file, but will this now stop me getting lower rates from anyone else? I can't seem to find any information on what to do if you don't get the advertised rate and don't want the increased offered rate!

Many thanks!

I have exactly the same situation (with Tesco Bank)!

95% chance of acceptance via MSE Credit Club (at 6.1% APR representative). Applied and offered a loan at 10.1%. Added £2k interest just like that. As you acknowledge, I understand this can happen but I’m inclined to look elsewhere.

Out of interest, were you successful in securing a superior rate from a different provider?

Would be very grateful if you see this and are happy to reply 😊

The OP has not been active on the site since Oct 21, 2023

Regardless, what they did or didn't get is moot as their circumstances and yours are different so cannot be used as a barometer of your chances. A second search is not the end of the world but I wouldn't assume you would necessarily get better rates, being offered such a big increase in interest suggests a limited or weak credit history meaning another lender will probably offer similar. Do consider the loan bandings too, a higher amount may give a lower rate of interest and you can overpay the extra money back off the loan if you are disciplined..

dans90

Nasqueron said:

dans90 said:

EmK2016 said:

HI

I have applied for a loan having carefully looked at the credit club affordability etc. had 95% chance of being accepted.

Applied for loan but instead of the 6.5% advertised rate, they have accepted application but offered 10.9% APR.

I was aware this could happen, but like most people, hope it doesn't and the only way to find out if to actually apply. This offer now makes a difference of around £2000 more in repayable interest which is a crazy amount.

Could someone explain how this application actually affects me making another application with a different lender to try and get a better rate before I go ahead and try another lender? I know it marks your file, but will this now stop me getting lower rates from anyone else? I can't seem to find any information on what to do if you don't get the advertised rate and don't want the increased offered rate!

Many thanks!

I have exactly the same situation (with Tesco Bank)!

95% chance of acceptance via MSE Credit Club (at 6.1% APR representative). Applied and offered a loan at 10.1%. Added £2k interest just like that. As you acknowledge, I understand this can happen but I’m inclined to look elsewhere.

Out of interest, were you successful in securing a superior rate from a different provider?

Would be very grateful if you see this and are happy to reply 😊

The OP has not been active on the site since Oct 21, 2023

Regardless, what they did or didn't get is moot as their circumstances and yours are different so cannot be used as a barometer of your chances. A second search is not the end of the world but I wouldn't assume you would necessarily get better rates, being offered such a big increase in interest suggests a limited or weak credit history meaning another lender will probably offer similar. Do consider the loan bandings too, a higher amount may give a lower rate of interest and you can overpay the extra money back off the loan if you are disciplined..

You’re right - thanks.

My credit rating is 999 with Experian (with high scores across the board for borrowing etc.), and similarly strong with TransUnion (which MSE Credit Club has obviously recently transitioned to), hence my surprise.

I’ve accepted the loan for now and once received, I’m considering applying with another lender. If their APR is materially more favourable, I’ll accept the second loan, await funds and then cancel the original loan in the 14-day cool-off period and repay in full.

Conversely, if there’s not much between the two, I can decline the second loan.

Does that sound viable? I’m not overly concerned about two back-to-back applications on my record affecting my score, as I won’t need credit again in the next 6-12 months so it allows time for it to improve back to its current rate.

Nasqueron

Your score is never seen by or used by lenders so it's not really surprising that the fake 999 score doesn't translate to good rates

Remember lenders consider new debt in addition to old debt so say you borrowed £5000 today, when you applied for a second loan for £5000, they would look at whether you could afford £10,000 as no guarantee you would spend the money to pay off the first loan or indeed cancel it.

Whether it's worth it is up to you but I can't see the harm in applying, worst they say is no, though if you think you will need credit again in 6 months you might do better just sticking to 1 and paying it off as fast as you can.

dans90

Ok - so in my circumstances (outlined above), presumably lender 2 would be able to see that I’ve taken on the new debt (i.e. accepted the loan) rather than it just displaying as a hard search from yesterday (with no sight of the outcome)?