Whats the best way of getting a small loan?

[sparks87]

My sister wishes to take out a £4000 fixed rate personal loan to buy a car. She has been on moneysupermarket.com and the best personal loan she can get is at around 17% apr, even though she has never missed any direct debit payments etc. She does live with the parents however and earns around £13,000 and no credit/store cards. Is it best just to go to the bank or is she better of looking all over the Internet? I would have thought 10% would be more realistic.

[ChristianZS]

To buy a 540i?

Try the bank instead.

[mybrainhurts]

Try looking at more than £4k

[Doug86]

I await the outcome of this post as my GF is in a very similar situation

[Alfa_75_Steve]

sparks87 said:

My sister wishes to take out a £4000 fixed rate personal loan to buy a car. She has been on moneysupermarket.com and the best personal loan she can get is at around 17% apr, even though she has never missed any direct debit payments etc. She does live with the parents however and earns around £13,000 and no credit/store cards. Is it best just to go to the bank or is she better of looking all over the Internet? I would have thought 10% would be more realistic.

On an amount that small, you'll only get 10% if you have a very good credit score - living at home and earning not much above minimum wage is always going to give issues.

I found the best way to combat the higher percentage on a smaller amount is to take out a bigger amount, tipping it into a lower interest banding, and make a massive overpayment within the first month to pay back the part of the loan you didn't need....

Which is exactly what I've done - I took a loan to buy a 'company' car, so I didn't tie up my own money in it, but only needed £5k - which attracted a 10.8% APR - by taking out £7.5k, I got the rate down to around 7.7%, but will be making an overpayment of £2.5k as soon as the first payment is due.

[sparks87]

mybrainhurts said:

Try looking at more than £4k

She doesn't want more than £4000 and she already has £2000 saved, she wants to pay it over 4/5 years and a 540 is not her type of car (is mine!), she has been looking at Focus's, Clio's etc etc.

[Sciroccology]

[Neil_H]

Her bank will probably be a better option.

[sparks87]

Alfa_75_Steve said:

sparks87 said:

My sister wishes to take out a £4000 fixed rate personal loan to buy a car. She has been on moneysupermarket.com and the best personal loan she can get is at around 17% apr, even though she has never missed any direct debit payments etc. She does live with the parents however and earns around £13,000 and no credit/store cards. Is it best just to go to the bank or is she better of looking all over the Internet? I would have thought 10% would be more realistic.

On an amount that small, you'll only get 10% if you have a very good credit score - living at home and earning not much above minimum wage is always going to give issues.

I found the best way to combat the higher percentage on a smaller amount is to take out a bigger amount, tipping it into a lower interest banding, and make a massive overpayment within the first month to pay back the part of the loan you didn't need....

Which is exactly what I've done - I took a loan to buy a 'company' car, so I didn't tie up my own money in it, but only needed £5k - which attracted a 10.8% APR - by taking out £7.5k, I got the rate down to around 7.7%, but will be making an overpayment of £2.5k as soon as the first payment is due.

Did that reduce the length of time you had to pay the loan, or reduce the amount per month?

[Wildfire]

Bank is the best way. I managed to get usecured personal loan over lunch time to sort out some issues and partially fund a new car.

[Ganglandboss]

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[Alfa_75_Steve]

sparks87 said:

Alfa_75_Steve said:

Which is exactly what I've done - I took a loan to buy a 'company' car, so I didn't tie up my own money in it, but only needed £5k - which attracted a 10.8% APR - by taking out £7.5k, I got the rate down to around 7.7%, but will be making an overpayment of £2.5k as soon as the first payment is due.

Did that reduce the length of time you had to pay the loan, or reduce the amount per month?

It reduces the term, not the amount paid back, unfortunately.

However, she could take out the loan over a longer term than originally planned, then shorten it by making said overpayment.

[Justayellowbadge]

sparks87 said:

mybrainhurts said:

Try looking at more than £4k

She doesn't want more than £4000 and she already has £2000 saved, she wants to pay it over 4/5 years and a 540 is not her type of car (is mine!), she has been looking at Focus's, Clio's etc etc.

Wouldn't she be better off buying a £2000 car?

[sparks87]

Alfa_75_Steve said:

sparks87 said:

Alfa_75_Steve said:

Which is exactly what I've done - I took a loan to buy a 'company' car, so I didn't tie up my own money in it, but only needed £5k - which attracted a 10.8% APR - by taking out £7.5k, I got the rate down to around 7.7%, but will be making an overpayment of £2.5k as soon as the first payment is due.

Did that reduce the length of time you had to pay the loan, or reduce the amount per month?

It reduces the term, not the amount paid back, unfortunately.

However, she could take out the loan over a longer term than originally planned, then shorten it by making said overpayment.

Hmm interesting, thanks. Don't they charge quite a bit for overpayment's though?

[Busamav]

If she can repay it in a year , get a 0% credit card ,

suffer the 3% for getting the money paid into your bank and crack on with the purchase

[Mark-C]

Justayellowbadge said:

sparks87 said:

mybrainhurts said:

Try looking at more than £4k

She doesn't want more than £4000 and she already has £2000 saved, she wants to pay it over 4/5 years and a 540 is not her type of car (is mine!), she has been looking at Focus's, Clio's etc etc.

Wouldn't she be better off buying a £2000 car?

Ansolutely - the way prices are now you can get a decent motor for 2K .... much better than paying interest on a loan whilst the car you buy rapidly depreciates to 2K anyway

[playerone]

9-12% is pretty standard for prime loans at the moment. Anything under £7500 is usually at the lenders highest rate. If she is near or sub prime she will probably pay 20-50%.

Go direct to the bank or Moneyback bank is usually the cheapest online for unsecured stuff.

[Alfa_75_Steve]

sparks87 said:

Alfa_75_Steve said:

sparks87 said:

Alfa_75_Steve said:

Which is exactly what I've done - I took a loan to buy a 'company' car, so I didn't tie up my own money in it, but only needed £5k - which attracted a 10.8% APR - by taking out £7.5k, I got the rate down to around 7.7%, but will be making an overpayment of £2.5k as soon as the first payment is due.

Did that reduce the length of time you had to pay the loan, or reduce the amount per month?

It reduces the term, not the amount paid back, unfortunately.

However, she could take out the loan over a longer term than originally planned, then shorten it by making said overpayment.

Hmm interesting, thanks. Don't they charge quite a bit for overpayment's though?

Only if you're paying off the full amount.

Certainly Lloyds TSB allow overpayment without penalty - minimum £100 / month.

It's a useful loophole, as if you want to clear a loan without paying a penalty, you simply send a cheque for the outstanding balance minus a month's payment - then pay it off the following month....

[Brown and Boris]

Think 2 years ahead and pop £25 a month in a credit union.

[shirt]

similar situation here. need £5k to finish off my renovations. went to my bank [barclays] for it, and was turned down as i have a £3k overdraft limit - even though my account is in credit.

the woman in the bank said she'd run the application again but with a £1k overdraft limit. this was succssful and they were willing to lend me upto £20k!!!

then she told me the best part - this £5k loan would only attract an interest rate of 24.9% apr. laugh? i nearly did!

was then told if i upped the loan to £7.5k i would get a better rate, but at this point i thought i best get out of toytown and borrow the money somewhere slightly more sensible.

all this despite me being told my credit score and banking history was all in good order!