why was i refused personal loan from banks with best APR ?

Question

i am permanent resident for 2 years in uk, continuously fully employed (current employment 7 months)

I have at least £1k income after taxes and all costs of living left each month, i wanted to borrow £5000 for 2 years.

i have no credit cards, loans, mortgages, children, past problems.

i still got an offer from my own bank, but 10% and high early repayment fees (around £250), and its competitors (APR 6-7%) refuse, why ?

what to do ?

Answer 1

Some interest rates offered only apply to certain customers.

I have a loan with Northern Rock at 5.9%. I recommended a friend but she was refused. Further investigation clarified that I was given the 5.9 % loan as I was a homeowner.

She is not a homeowner and was offered a loan at 12.9 % with a £200.00 arrangement fee.

The terms and conditions and qualifying conditions can vary greatly between loans.

Answer 2

Like the others say - if you have no credit, most lenders aren't interested. Get a couple of credit cards - you don't have to use them, but it'll give you a credit rating.
Also, be aware that "smaller" amounts rarely get the best APR on offer. Some banks also want 3 years worth of residency, but not all, providing you have proof of address from before that time.

Answer 3

Some banks offer a loan option that is usually guaranteed for approval and is an excellent way of cleaning up your credit. It's a loan backed by a certificate of deposit....basically, you purchase a CD from the bank, then put it up as collateral for the loan. You can then make payments, usually at a decent interest rate. It's very low risk, and a great way to build credit.

Answer 4

try talking to them often the low APR deals are available for a very selected group of people. in some cases it may be adverstised but not actaully exisit (eg the offer may be to people working in a bank, earnign more than £100000 per year wanting to borrow less than £10000).. its called a come on, to eght you to apply for a loan with them. usually the APR is based on the amount of risk the the bank thinks they take with you. That risk isn't neccesarily a detailed risk assessment of you personanly but by using a credit scoring method. ironically enough having no existing debt, credit cards etc.. may make you a mystery person in their eyes. If you have a track record of taking on debt and paying it off it improoves the credit score. having no track record will adversely affect your credit score, appearing 2 years ago will affect your credit score. Banks tend to keep their credit scroing rules very quiet.. its just the system

Answer 5

Here's the big red flag: i have no credit cards, loans, mortgages, children, past problems

This means you have no credit history, which is a key factor in determininig loan rates. Until you establish a good credit report, you wont get the best rates.

And by applying all over, you racked up inquiries, which also dings your score.

Answer 6

There are two basic types of searches recorded on your credit file, a credit application search and an enquiry. Only credit application searches are seen by lenders, so that they can make an assessment of how ‘credit active’ you are. There are lots of myths about the problems caused by having several credit application searches recorded on your credit file. Certainly, many searches within an hour or two can indicate a possible fraud, and dozens in a month can indicate financial desperation, but up to about 12 searches on file in a year is perfectly normal and is expected. Very low levels of searches can tell lenders that you are not very credit active, so they may not be so willing to lend to you.
so you need to be in debt to get anything !

Answer 7

By not having Credit Cards or loans or a mortgage you don't have a credit history which means your bank are unable to decide whether you are credit worthy or a bad risk.

Answer 8

Sometimes if you have a credit history (a clean history of borrowing and also replaying your debts) you get better rate. However I agree.... its hard to get the headline APR rates that some lending organizations offer. After alot of hunting my sister got a loan for £6,500 to pay off her student debt via the Alliance and Leicester at 6.5% ARP. She'd had the orginal loan via RBOS... who wanted to charge her 19.5% APR. Keep hunting for a good deal and good luck.

Answer 9

what corrine says is true.

It is a vicious circle, creditors will only give you a loan if you already have outstanding amounts elsewhere.

They want to see that you are paying off things every month.

As far as that lender was concerned, you have no credit rating. Strange I know!

Answer 10

get some credit cards and max them out then they will give you a loan lol
you need outstanding credit to get a good credit rating