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    • holyfire82
    • By holyfire82 10th May 18, 12:09 PM
    • 12Posts
    • 1Thanks
    holyfire82
    Extending Current Loan
    • #1
    • 10th May 18, 12:09 PM
    Extending Current Loan 10th May 18 at 12:09 PM
    Hi

    I got a loan fomr my bank (santander) for 3000 over 4 years in feb this year, i had to pay for some unexpected things (funeral etc.) and was accepted fine. I also have an overdraft of 1300 on my account, which i really want to cancel.

    Anyway - i was stupid and didnt realise that my loan has an apr of 21%, and if i had gotten a loan of more than 5000 the apr would decrease massively to around 5%. i had asked the bank the next month about changing my loan but was told that id need to wait 90 days before applying for this.

    I have been overdrawn over a few times, and have a regularly monthly wage (roughly 1350) every month and anytime i have been overdrawn (twice this year) its been cleared on my pay day. I am actually just into my overdraft today but in two weeks get paid so thatll clear that.

    I am asking that in 3 weeks time if i apply to extend the loan amount am i likely to be rejected being so soon, is my overdraft affecting my credit rating? Using experian it says i have a credit rating of 950 which is good.

    any advice would be great. thanks
Page 1
    • PeacefulWaters
    • By PeacefulWaters 10th May 18, 12:16 PM
    • 8,318 Posts
    • 10,670 Thanks
    PeacefulWaters
    • #2
    • 10th May 18, 12:16 PM
    • #2
    • 10th May 18, 12:16 PM
    Using experian it says i have a credit rating of 950 which is good an irrelevant number not used by those who lend you money.
    Hope that adjustment helps.
    • holyfire82
    • By holyfire82 10th May 18, 12:27 PM
    • 12 Posts
    • 1 Thanks
    holyfire82
    • #3
    • 10th May 18, 12:27 PM
    • #3
    • 10th May 18, 12:27 PM
    haha ok sorry.

    so what is going to affect my 'score' for my bank?

    and as per my original question - is it safe for me to increase my loan in 3/4 weeks time? Or is the fact that i got my loan out 3 months ago and an overdraft 3/4 months ago going to mean im rejected?

    I have never been in debt or had any other loans until now by the way.
    • Xbigman
    • By Xbigman 11th May 18, 6:49 AM
    • 3,130 Posts
    • 1,362 Thanks
    Xbigman
    • #4
    • 11th May 18, 6:49 AM
    • #4
    • 11th May 18, 6:49 AM
    Its not a loan extension. What will happen is that Santander will generate a settlement figure, with early settlement interest at 21%, and then create a new loan for you. Paying off the old loan with the new loan and giving you the leftover amount.

    That's assuming they give you this loan at all. You borrowed 3k over 4 years and they thought you were such a bad risk they hit you with 21% interest. That's a good indication of what they think of your credit history.

    I can believe you are a first time borrower because you are making every mistake in the book. Borrowing more to pay less is not the way to look at it. Borrowing over longer terms to pay less is even worse, and that will be where you go next. The way out is to control your spending and clear your overdraft a bit each month until it is gone. Then make overpayments on this horrendous loan and clear that. The technical term for the position you will then find yourself in is 'debt free'.
    Playing the overdraft/loan merry go round is the route to misery.



    Darren
    Xbigman's guide to a happy life.

    Eat properly
    Sleep properly
    Save some money
    • holyfire82
    • By holyfire82 11th May 18, 7:37 AM
    • 12 Posts
    • 1 Thanks
    holyfire82
    • #5
    • 11th May 18, 7:37 AM
    • #5
    • 11th May 18, 7:37 AM
    wow - your reply has me very worried!

    just to clarify a few points though:

    santander's normal rate for a 3000 loan over 48 months is 15-16% using their website - and mine is actually 20.9% - its higher but not like its way higher.

    I know I dont have a bad credit history - i think my problem until 6 months ago is that I did have ANY credit history. I have never had a loan before, never had an overdraft, never had a credit card. I guess this was bad in that sense right?

    My overdraft isn't a real issue, I only ever got it is an emergency stop so to speak. Since getting it i've been overdrawn a max of 3/4 days in total in the last 6months , and only a fraction of the overdraft itself (approx 90 overdrawn ) - i get paid and the overdraft is cleared immediately. i don't 'live' in my overdraft in any way so dont need to 'pay it off', other than the once or twice ive been overdrawn by a tiny amount near the end of ta month once or twice, which i did anyway.

    With this in mind, and the fact ive paid 3 or 4 loan repayments on time etc I would have thought my credit rating might be actually better for the bank now as the bank can see im making regular payments.

    extending, or getting a larger loan isnt vital, but i wish i would have gotten a larger amount back i feb and would like to address that if i could.

    but after all being said are they likely to reject me?

    any comments or help appreciated, thanks
    Last edited by holyfire82; 11-05-2018 at 7:40 AM.
    • DCFC79
    • By DCFC79 11th May 18, 8:26 AM
    • 32,543 Posts
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    DCFC79
    • #6
    • 11th May 18, 8:26 AM
    • #6
    • 11th May 18, 8:26 AM
    The bank doesnt see the number so even if it does increase no 1 but you will see the increase, the bank just gets the loan payments.
    • holyfire82
    • By holyfire82 11th May 18, 8:56 AM
    • 12 Posts
    • 1 Thanks
    holyfire82
    • #7
    • 11th May 18, 8:56 AM
    • #7
    • 11th May 18, 8:56 AM
    i meant would the last 6 months of actually paying a loan and being overdrawn slightly once to twice and paying it off improve my credit history (not my rating/score)

    as ive said - is it possible for me to redo my loan/extend it/increase it or am i likely to be rejected?
    • Pixie5740
    • By Pixie5740 11th May 18, 8:59 AM
    • 12,907 Posts
    • 18,538 Thanks
    Pixie5740
    • #8
    • 11th May 18, 8:59 AM
    • #8
    • 11th May 18, 8:59 AM
    i meant would the last 6 months of actually paying a loan and being overdrawn slightly once to twice and paying it off improve my credit history (not my rating/score)

    as ive said - is it possible for me to redo my loan/extend it/increase it or am i likely to be rejected?
    Originally posted by holyfire82
    Dipping into your overdraft doesn't look good to lenders. It shows that you have trouble budgeting, especially if it is a frequent occurrence.

    https://www.moneysavingexpert.com/loans/credit-rating-credit-score
    • holyfire82
    • By holyfire82 11th May 18, 10:04 AM
    • 12 Posts
    • 1 Thanks
    holyfire82
    • #9
    • 11th May 18, 10:04 AM
    • #9
    • 11th May 18, 10:04 AM
    Dipping into your overdraft doesn't look good to lenders. It shows that you have trouble budgeting, especially if it is a frequent occurrence.
    Originally posted by Pixie5740
    I read a bit on some websites i didn't think this was true really. Going overdrawn a little and haying it off within a few days shows i can pay off debts.

    When i first got my loan i was told the reason the APR was higher than normal was really down to the fact i had no credit history and was i guess an 'unknown' to the bank in terms of ability to pay off debts. Would this have been right?

    and not to labour the point - but am i likely to be rejected for the extension/new loan or is it best to leave it another few months or shouldnt that matter?

    thanks again
    • Pixie5740
    • By Pixie5740 11th May 18, 10:38 AM
    • 12,907 Posts
    • 18,538 Thanks
    Pixie5740
    I read a bit on some websites i didn't think this was true really. Going overdrawn a little and haying it off within a few days shows i can pay off debts.
    Originally posted by holyfire82
    You can tell the lender that then if you are declined another loan.

    When i first got my loan i was told the reason the APR was higher than normal was really down to the fact i had no credit history and was i guess an 'unknown' to the bank in terms of ability to pay off debts. Would this have been right?
    Originally posted by holyfire82
    Quite possibly, but as you will have read in the link I provided credit history, or lack of, is only part of the story.

    and not to labour the point - but am i likely to be rejected for the extension/new loan or is it best to leave it another few months or shouldnt that matter?

    thanks again
    Originally posted by holyfire82
    How would we know? No one of this forum has a clue what Santander's internal lending policy is and how they determine what rate to offer and to whom. You could do worse than trying the MSE loan eligibility calculator.

    https://www.moneysavingexpert.com/eligibility/loans-calculator/
    • badmemory
    • By badmemory 11th May 18, 11:09 AM
    • 1,971 Posts
    • 2,690 Thanks
    badmemory
    Rather than sink your hard earned into this, why not look at some debt free wanabees stories & see what you could avoid. Because your next interest rate will not be 21% it will be more like 30% or more. The basic principle is that no-one wants to lend to someone who actually NEEDS to borrow. The greater the need the higher the %.
    • holyfire82
    • By holyfire82 11th May 18, 11:22 AM
    • 12 Posts
    • 1 Thanks
    holyfire82
    badmemory, im not desperate or near to being that point but thanks anyway! iI have a steady monthly income and a solid job. Im not looking to borrow loads and loads - im 35 and this is the first loan or borrowing i have ever done.

    i guess i just wish i went back 3 months and borrowed a bit more initially. unforntnatly the oringal reaosns i had to get the loan was to pay for some unexpected things like funerals and the expenses related to these. Afterwards i could have done with a little more left over so wish i had took more out. My monthyl payments are 80 and it really wouldnt matter to me if the loan was larger and the payments went up to 130ish as it really isnt a big issue.

    Maybe if i still want to have the larger loan the best would be to use another provider such as adrimal/aa/post office and get the 6000 and use some to pay off my remaining santander loan. at least if i wanted to do that i would have the extra money i should have got out int he first place.

    if that makes sense
    • holyfire82
    • By holyfire82 11th May 18, 3:09 PM
    • 12 Posts
    • 1 Thanks
    holyfire82
    also....the mse loan calculator is good - i have a lot of 'excellent' and 90% chance of approvals on there - but santander's is 60%

    would the fact i am an existing customer of theirs count and increase that eligibility? or not? if i did get the larger loan id prefer it to be with my own bank - just for ease of use really.
    • MallyGirl
    • By MallyGirl 11th May 18, 3:57 PM
    • 2,950 Posts
    • 7,946 Thanks
    MallyGirl
    Hi

    Anyway - i was stupid and didnt realise that my loan has an apr of 21%, and if i had gotten a loan of more than 5000 the apr would decrease massively to around 5%. i had asked the bank the next month about changing my loan but was told that id need to wait 90 days before applying for this.
    Originally posted by holyfire82
    This is extremely unlikely. Some people will get an APR of 5% for that size loan - it is not likely, with your limited history, that you would be one of those lucky few.
    I'm a Board Guide on the Debt-free Wannabe, Loans & Credit Cards boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Board guides are not moderators and don't read every post. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    Any views are mine and not the official line of MoneySavingExpert.com.
    • holyfire82
    • By holyfire82 11th May 18, 5:22 PM
    • 12 Posts
    • 1 Thanks
    holyfire82
    I know mallygirl - i mean the rate offered on their site for my original 3000 loan was something like 14 or 15% and i got 21%

    so with those ratios the 5% would be closer to 10% probably but that's still just over half of what i have now.
    • MallyGirl
    • By MallyGirl 11th May 18, 5:27 PM
    • 2,950 Posts
    • 7,946 Thanks
    MallyGirl
    I am not sure that you can make that assumption on the rate
    • holyfire82
    • By holyfire82 11th May 18, 6:09 PM
    • 12 Posts
    • 1 Thanks
    holyfire82
    i guess you're right - its just a reasoned assumption based on the following:

    i mean, i have no other debts (small overdrawn fees the odd time withstanding), ccjs, credit cards, steady monthly income in the same job for 10+ years now and ive had my current account for 20+ years too. Never missed a bill or direct debit payment for phone/or the union im in..... so id figure that would come into play as well.

    or am I missing something and im wrong?

    thanks again
    • zx81
    • By zx81 11th May 18, 6:38 PM
    • 18,549 Posts
    • 19,814 Thanks
    zx81
    or am I missing something and im wrong?
    Originally posted by holyfire82
    Yes. You're missing the fact you already have an expensive loan and keep going overdrawn.

    That tells lenders that you have no spare money at all and are therefore high risk.
    • bazzyb
    • By bazzyb 11th May 18, 7:16 PM
    • 1,213 Posts
    • 3,286 Thanks
    bazzyb
    You've basically asked the same question several times but the only way you will find out if you will be accepted, and at what rate, is to apply.

    As many others have pointed out it is an extremely bad idea to borrow more money just to get a better rate. If you were looking to borrow the same amount from somewhere else to replace this one and save on interest a little I could kind of understand where you are coming from - but what you are suggesting sounds pretty bonkers to me.
    • Gaz83
    • By Gaz83 11th May 18, 7:21 PM
    • 3,542 Posts
    • 6,749 Thanks
    Gaz83
    OP, have you missed any payments on your current loan?
    "Facism arrives as your friend. It will restore your honour, make you feel proud, protect your house, give you a job, clean up the neighbourhood, remind you of how great you once were, clear out the venal and the corrupt, remove anything you feel is unlike you... [it] doesn't walk in saying, "our programme means militias, mass imprisonments, transportations, war and persecution."
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