Asking Banks about loans
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Ill get straight to the point, I want a loan which ill use to buy a car, I could easily just buy the car outright but as im looking at building my credit rating (yes, i'm fully aware of credit cards, I have one already), my plan is to take out a £7500 loan (as the interest is at its lowest), pay 4-5k back straight away then just pay the rest back over 48 months which would be around 60-80 a month. Now if i told the bank that was my plan, would it hinder my chances of having my loan approved? I mean the interest would stay the same regardless of whether or not I paid a huge chunk of it back right at the start.
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It's a mad idea.
Pay cash for the car and get a credit card to build credit history.
Better history, zero cost.0 -
No need to tell them the exact details.
But for this sort of amount, why not look at 0% credit cards? Build credit without paying interest.
Maximum durations are about 27m I think, so if you can afford to pay back ~£130 a month then that's what I would do.0 -
Ill get straight to the point, I want a loan which ill use to buy a car, I could easily just buy the car outright but as im looking at building my credit rating, my plan is to take out a £7500 loan (as the interest is at its lowest), pay 4-5k back straight away then just pay the rest back over 48 months which would be around 60-80 a month. Now if i told the bank that was my plan, would it hinder my chances of having my loan approved? I mean the interest would stay the same regardless of whether or not I paid a huge chunk of it back right at the start.
You can do what ever you like no matter what the folk on here say.
Take out the loan, buy the car you want, pay back £5,000 after a few weeks (you will be charged some interest, but it wont be very much) and pay the balance at the contracted monthly amount (it wont be the £60-£80 a month you seem to of worked out).
No need to tell the bank what you intent to do, just do it.
Your agreement will be a lot shorter, you wont spend the next 48 months paying down the balance as the monthly payment stays the same, the term just shortens. But you will achieve what you set out to achieve, credit history.0 -
foxy-stoat wrote: »You can do what ever you like no matter what the folk on here say.
Take out the loan, buy the car you want, pay back £5,000 after a few weeks (you will be charged some interest, but it wont be very much) and pay the balance at the contracted monthly amount (it wont be the £60-£80 a month you seem to of worked out).
No need to tell the bank what you intent to do, just do it.
Your agreement will be a lot shorter, you wont spend the next 48 months paying down the balance as the monthly payment stays the same, the term just shortens. But you will achieve what you set out to achieve, credit history.
With Santander, when you make an overpayment you are given the option whether you want to lower the monthly rate, or reduce the term of the loan which is why im expecting the monthly repayment to drop to between 60-800 -
zx81 Hit the nail on the head. What you propose is neither the cheapest or best way of building a credit history.0
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Would the interest remain the same if you made a large overpayment? Surely by repaying a large chunk of the loan early you would save yourself some interest whilst at the same time making the bank less money.
You don't need to pay any money (interest) to build your credit history. All you need to do is spend on a credit card each month and ensure that you pay the balance in full.0 -
Would the interest remain the same if you made a large overpayment? Surely by repaying a large chunk of the loan early you would save yourself some interest whilst at the same time making the bank less money.
You don't need to pay any money (interest) to build your credit history. All you need to do is spend on a credit card each month and ensure that you pay the balance in full.
The loan is fixed, interest wont drop so the bank would make the same amount of money back regardless of whether i made an overpayment.0 -
No they won't. Overpayments reduce the amount of interest paid.0
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The loan is fixed, interest wont drop so the bank would make the same amount of money back regardless of whether i made an overpayment.
No, they won't.
You can see for yourself using MSE Mortgage* Overpayment Calculator.
https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator
*Yes I know you want a personal loan and not a mortgage but the principle is the same.0
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