Loan approved but at a higher interest rate than expected

[Jaaack]

I've never taken a loan out before other than my mortgage, so I'm pretty inexperienced with all this. Looking at borrowing £10k towards a car. Cahoot offered the best looking product on the comparison sites - 2.8% APR meaning I'd pay back £10,290 at £428/month over 2 years, and no deferment interest to worry about. Filled out a full application which has been accepted but at 14.9% - bringing my payments up to £479.99/month and a total payable of £11,496. Can't understand why it's so far from the representative rate - credit score is almost perfect (over 970) and I have a mortgage, been in the same job for 10+ years etc.

Obviously I don't want to pay £50/month more than I was intending, but if need be then I'll have to just bite the bullet. I was thinking of applying elsewhere but I'm worried about screwing my credit rating. Could it invalidate the offer I've been given? Is it even worth applying anywhere else right now or should I just take it?

Note: Some people may advise me to wait and save, but the vehicle I am looking at getting into is quite rare and an appreciating modern classic, currently around £25k (up from £15k 3-4 years ago) so I'm in a bit of a 'now or never' situation. I don't particularly care about the investment side of it, but I want to get into one of my dream cars before the chance escapes me. By the time I've saved up the current price, they'll likely be £5-10k more than they are now.

Part of me is just saying bite the bullet, it's £1500 on a £25k purchase and the vehicle will quickly be worth more than the £26.5k it'd owe me, so just grit my teeth and pay it off for 2 years. But the other half of me is saying I should try and find the cheapest deal - just reluctant to apply anywhere else for reasons above.

Thanks in advance!

[NickCQ]

Sounds like you have been on the receiving end of a classic "bait and switch" - all you can do is shop around, I wouldn't worry too much about credit scores in this scenario. 14.9% is a particularly terrible rate for someone without adverse credit history.

Jaaack said:

the vehicle will quickly be worth more than the £26.5k it'd owe me

Fixer upper or appreciating classic?

[GregK2]

Do not pay 14.9% interest and stop trying to rationalise doing so. They only have to offer the representative rate to 51% of applicants, apply elsewhere.

Use this to get an idea of your most likely success
https://www.moneysavingexpert.com/eligibility/loan...

[Jiebo]

15% interest in atrocious unless you're a council estate dweller with a string of zero contract jobs and a few CCJs. Don't allow yourself to be mugged off.

[tjl]

Just borrowed from Sainsbury’s bank at 2.8%. Painless process.

[eliot]

out of interest were you aware of the new rate before accepting and presumably receiving the loan?

[Gary C]

Go to your bank and see what they will offer.

[paulwf]

I had this with AA loans - when looking online there were lots of people complaining about bait and switch APR
I used my own bank

[Defcon5]

Is the OP not now at risk of being declined by other lenders owing to the credit searches done for this one?

[Teddy Lop]

Defcon5 said:

Is the OP not now at risk of being declined by other lenders owing to the credit searches done for this one?

as this one has already been approved he can bank it as his worst case fall rack option and has little to lose buy shopping around?

OP does someone you already bank with not continually bombard you with supposedly pre-approved loan offers?

[paulwf]

Defcon5 said:

Is the OP not now at risk of being declined by other lenders owing to the credit searches done for this one?

That was my concern, which is why I then took the banks pre-approved offer

[Benbay001]

Jaaack said:

I was thinking of applying elsewhere but I'm worried about screwing my credit rating. Could it invalidate the offer I've been given? Is it even worth applying anywhere else right now or should I just take it?

You need to stop worrying about the "score" lenders dont see your score, so it makes no difference whether its 970 or 200, as long as you dont have missed payments reported on your history, and that your total debt is reasonable compared to your income.

Have you considered a money transfer credit card? If your income is a bit above average you may be able to get 1 card to cover all £10k, or two card of £5k each.

The money transfer card is likely to be 20 months 0% with 3% transfer fee. https://www.moneysavingexpert.com/eligibility/cred...

Otherwise just keep applying.

[Dimebars]

There are plenty of sites out there that will soft-search what you're likely to be accepted for

Saves the hassle of what you've just went through

[Mr_Megalomaniac]

Gary C said:

Go to your bank and see what they will offer.

OP, this is likely to help.
I got an offer of 3.8% on my personal account and have a 999 credit score with no blemishes. However the dealer was offering something absurd like 9%.
Check your own bank first, you may be pleasantly surprised.

[Simpo Two]

If the OP was lured in by a low rate but only offered one 5x higher, he should not be penalised for walking away.

Still, I guess all those TV adverts have to be paid for.

[Mr Whippy]

What car is it? This is PH after all

On credit scores, surely you can get many quotes and accept the cheapest and this not be a detriment to your credit score?

[Welshbeef]

meifangperformer said:

Well you got not very good proposition from your bank, in this case, I would suggest you get a better credit score and when you look at the offer they will have for you, in my opinion paying a small loan is not really difficult.

Wholly thread resurrection .

[Mr Whippy]

But what car did they get?

And did it go up in value as predicted?

[Caddyshack]

Mr Whippy said:

What car is it? This is PH after all

On credit scores, surely you can get many quotes and accept the cheapest and this not be a detriment to your credit score?

Each credit check search lowers the ‘score". But people think their score being as close to 999 is great for credit. Whilst a low score would indicate some poor credit a high score does not really mean much as a lender has their own scoring system based on the customer profile they want…. I.e a lender wanting only Paye borrowers will have a low score.

[Gary C]

Welshbeef said:

meifangperformer said:

Well you got not very good proposition from your bank, in this case, I would suggest you get a better credit score and when you look at the offer they will have for you, in my opinion paying a small loan is not really difficult.

Wholly thread resurrection .

Not only that, they didn't actually read the OP, got the totally wrong end of the stick, and produce utterly ste 'advice'