Applied for a loan so APR on other loans increased

GDaines

I applied for a loan to buy a car, so it isn't a small loan, but I have a fantastic credit score.

I went to Tesco Bank as they were offering 6.0% but was having issues applying online, so I called them late afternoon on Monday. I don't recall whether they told me before or after agreeing to a credit search that the offer would have to be sent by post taking up to 5 working days, and I'd have to return the contract before funds would be released. This is potentially a problem as I wanted to pick up a car on Saturday as my old car has given up.

I'd used the eligibility checkers on a number of comparison sites before this application and MBNA were offering 6.2% APR (approximately £2 per month more expensive) with a claim to releasing funds within 2 hours of being approved. On Tuesday afternoon I decided I was going to apply with them and not proceed with Tesco, so off I went back to the comparison site. However, upon refreshing the quote it's now increased to 6.6% APR increasing the payments to just under £6 per month more than Tesco, or about £250 extra over the life of the loan.

This isn't the only rate that appears to have increased, so it appears to relate to the fact that I've submitted an application already which leaves me faced with a dilemma - wait out Tesco and hope I get the funds by the weekend (I'm a pessimist and doubt this will be the case), apply with MBNA and pay more albeit just a few pounds, or apply with M&S at the same rate as Tesco where my eligibility is rated at 95% rather than 100% and there's no indication of whether the funds are paid out straight away or not. Sainsburys used to pay out immediately but they've pulled out of the loans market, and HSBC did too but I'm no longer eligible since moving my current account elsewhere (I only have a savings account with them).

Is this normal, does applying for a loan immediately make a second application more expensive?

Brie

Have you tried clearing your browsing history as I've heard that might effect pricing on some websites.  

CliveOfIndia

When you submit a full application (as opposed to an eligibility check) this will result in a hard search, which is visible to lenders.  A single hard search in isolation would not usually have any meaningful effect on other applications, but more than a couple of searches in a short space of time can start to have an impact - have you applied for any other credit products recently?

Aside from that, Brie's suggestion to clear cookies and browsing history is definitely worth trying.

And do remember, your "fantastic" credit score is entirely meaningless - it plays no part in lending decisions, and is not even seen by lenders.

Do bear in mind that an eligibility check is, at best, a rough indication of what rate you might be offered - it's not at all uncommon for a full application to result in a different rate being offered.

Finally, if the application with Tesco has been approved and you're happy with the offer, the simplest course of action would seem to be to wait until the funds are released.  I'm sure whoever you're buying the car from won't mind a delay of a few days, and you must be able to make do without a car for a few days?  Presumably you're without a car between now and Saturday anyway?