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  • FIRST POST
    • btwJohn
    • By btwJohn 6th Aug 18, 10:45 AM
    • 5Posts
    • 0Thanks
    btwJohn
    Asking Banks about loans
    • #1
    • 6th Aug 18, 10:45 AM
    Asking Banks about loans 6th Aug 18 at 10:45 AM
    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.
    Last edited by btwJohn; 06-08-2018 at 11:44 AM.
Page 1
    • zx81
    • By zx81 6th Aug 18, 10:47 AM
    • 19,669 Posts
    • 21,064 Thanks
    zx81
    • #2
    • 6th Aug 18, 10:47 AM
    • #2
    • 6th Aug 18, 10:47 AM
    It's a mad idea.

    Pay cash for the car and get a credit card to build credit history.

    Better history, zero cost.
    • DrEskimo
    • By DrEskimo 6th Aug 18, 10:47 AM
    • 310 Posts
    • 229 Thanks
    DrEskimo
    • #3
    • 6th Aug 18, 10:47 AM
    • #3
    • 6th Aug 18, 10:47 AM
    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.
    • foxy-stoat
    • By foxy-stoat 6th Aug 18, 11:05 AM
    • 3,221 Posts
    • 1,821 Thanks
    foxy-stoat
    • #4
    • 6th Aug 18, 11:05 AM
    • #4
    • 6th Aug 18, 11:05 AM
    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.
    Originally posted by btwJohn
    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.
    • btwJohn
    • By btwJohn 6th Aug 18, 11:24 AM
    • 5 Posts
    • 0 Thanks
    btwJohn
    • #5
    • 6th Aug 18, 11:24 AM
    • #5
    • 6th Aug 18, 11:24 AM
    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.
    Originally posted by foxy-stoat
    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 60-80
    • MEM62
    • By MEM62 6th Aug 18, 11:30 AM
    • 1,893 Posts
    • 1,533 Thanks
    MEM62
    • #6
    • 6th Aug 18, 11:30 AM
    • #6
    • 6th Aug 18, 11:30 AM
    zx81 Hit the nail on the head. What you propose is neither the cheapest or best way of building a credit history.
    • Pixie5740
    • By Pixie5740 6th Aug 18, 11:31 AM
    • 13,371 Posts
    • 19,261 Thanks
    Pixie5740
    • #7
    • 6th Aug 18, 11:31 AM
    • #7
    • 6th Aug 18, 11:31 AM
    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.
    • btwJohn
    • By btwJohn 6th Aug 18, 11:37 AM
    • 5 Posts
    • 0 Thanks
    btwJohn
    • #8
    • 6th Aug 18, 11:37 AM
    • #8
    • 6th Aug 18, 11:37 AM
    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.
    Originally posted by Pixie5740
    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.
    • zx81
    • By zx81 6th Aug 18, 11:43 AM
    • 19,669 Posts
    • 21,064 Thanks
    zx81
    • #9
    • 6th Aug 18, 11:43 AM
    • #9
    • 6th Aug 18, 11:43 AM
    No they won't. Overpayments reduce the amount of interest paid.
    • Pixie5740
    • By Pixie5740 6th Aug 18, 12:13 PM
    • 13,371 Posts
    • 19,261 Thanks
    Pixie5740
    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.
    Originally posted by btwJohn
    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.
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