Typical bank loans...


U

uknewsfan

Hi,
I have never taken out a bank loan before, but I'm looking for ways to
reduce the interest I'm paying on my credit card debts. I bank with
FirstDirect and their usual loan rate is 9.9% APR. (Rather high, I
know.) I'd be looking to borrow £10,000 to pay off credit cards which
charge a higher rate than that (average approx 15%APR). Here are some
questions:

Is there any advantage to getting the loan from my usual bankers
(FirstDirect), who I have been banking with for about 10 years and
with whom I have proved reliable and responsible in the management of
my account (dispite the rather high 9.9% rate)? I want to avoid too
much detailed disclosure of my financial circumstances, and I want to
avoid securing the loan on my house if possible. They saw fit to give
me a credit card with a £19,000 credit limit (which I never use due to
the high APR), so I'm hoping they's use the same reasoning to give me
an unsecured loan of half that amount.

Or are bank loans always secured loans?

What, if any, are the main DISadvantages of bank loans?
Look, I hate to preach here, but PLEASE consider this. Only borrow if
you are going to cancel, not cut up, the cards OR you are absolutely
guarenteed not to run up the debt again. You will end up with a loan,
and be back at square one in 18 months if thats not the case..
 
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H

Hank

Hi,
I have never taken out a bank loan before, but I'm looking for ways to
reduce the interest I'm paying on my credit card debts. I bank with
FirstDirect and their usual loan rate is 9.9% APR. (Rather high, I
know.) I'd be looking to borrow £10,000 to pay off credit cards which
charge a higher rate than that (average approx 15%APR). Here are some
questions:

Is there any advantage to getting the loan from my usual bankers
(FirstDirect), who I have been banking with for about 10 years and
with whom I have proved reliable and responsible in the management of
my account (dispite the rather high 9.9% rate)? I want to avoid too
much detailed disclosure of my financial circumstances, and I want to
avoid securing the loan on my house if possible. They saw fit to give
me a credit card with a £19,000 credit limit (which I never use due to
the high APR), so I'm hoping they's use the same reasoning to give me
an unsecured loan of half that amount.

Or are bank loans always secured loans?

What, if any, are the main DISadvantages of bank loans? Lack of
flexibility, and being tied to repaying a fixed amount of capital each
month seems to be one, but are there any typical adverse terms and
conditions that one should be wary of?

How much information do banks typically want out of you when you apply
for a loan? (That is, in addition to information they can readily
access regards my account with them)?

Thank you for any info.

Hank
 
M

MrCheerful

Hank said:
Hi,
I have never taken out a bank loan before, but I'm looking for ways to
reduce the interest I'm paying on my credit card debts. I bank with
FirstDirect and their usual loan rate is 9.9% APR. (Rather high, I
know.) I'd be looking to borrow £10,000 to pay off credit cards which
charge a higher rate than that (average approx 15%APR). Here are some
questions:

Is there any advantage to getting the loan from my usual bankers
(FirstDirect), who I have been banking with for about 10 years and
with whom I have proved reliable and responsible in the management of
my account (dispite the rather high 9.9% rate)? I want to avoid too
much detailed disclosure of my financial circumstances, and I want to
avoid securing the loan on my house if possible. They saw fit to give
me a credit card with a £19,000 credit limit (which I never use due to
the high APR), so I'm hoping they's use the same reasoning to give me
an unsecured loan of half that amount.

Or are bank loans always secured loans?

What, if any, are the main DISadvantages of bank loans? Lack of
flexibility, and being tied to repaying a fixed amount of capital each
month seems to be one, but are there any typical adverse terms and
conditions that one should be wary of?

How much information do banks typically want out of you when you apply
for a loan? (That is, in addition to information they can readily
access regards my account with them)?

Thank you for any info.

Hank
first do any zero percent balance transfers if possible. abbey charge 7.9
percent so that is a pretty common sort of value, see if you can nudge your
bank to that. the least hassle is nice, but not cheapest usually. the
fixed payment with an end in sight is a good thing I have found. look to
the shortest possible time scale 18months 10000 is 880 a month.

Mrcheerful
 
S

Snuggles

Hank said:
Hi,
I have never taken out a bank loan before, but I'm looking for ways to
reduce the interest I'm paying on my credit card debts. I bank with
FirstDirect and their usual loan rate is 9.9% APR. (Rather high, I
know.)
Have you looked in the loans section when you are logged onto internet
banking? If you click on apply, personal loans, you should be able to see
how much they will provisionally lend you and at what APR. They are
currently offering me 6.9%, I would certainly never take a loan out with
them at their standard rate.


I'd be looking to borrow £10,000 to pay off credit cards which
 
H

Hank

Look, I hate to preach here, but PLEASE consider this. Only borrow if
you are going to cancel, not cut up, the cards OR you are absolutely
guarenteed not to run up the debt again. You will end up with a loan,
and be back at square one in 18 months if thats not the case..
It's good advice, thanks. My credit card debt seems to have hovered
around the £50,000 mark for several years. I plan to get a steady job'
soon, so I can wittle down the debt. But I'd still like to minimise
the interest I'm paying. Can't afford to pay off much capital untill I
land the hoped-for steady job.

Hank
 
H

Hank

first do any zero percent balance transfers if possible. abbey charge 7.9
percent so that is a pretty common sort of value, see if you can nudge your
bank to that. the least hassle is nice, but not cheapest usually. the
fixed payment with an end in sight is a good thing I have found. look to
the shortest possible time scale 18months 10000 is 880 a month.
Yes, I always do that when possible. Trouble is, this is usually only
available to newly-opened card accounts, and I have already exploited
that to the max; I don't think there are any card-issuers left that I
don't already have cards with who would give me much credit. My credit
rating isprobably not that good since I lost my steady job, I have
only been paying the minimum payment on all my cards each month.

I owe about £50,000 on cards. A good portion of that is on a good
rate, such as 5.9% for the life of the balance. But about £10,000 is
on higher rate cards. One of them will go up from 3.9% to 27% if I
don't pay it off by May. I often juggling of balances to take
advantage of balance transfer rate offers, but card companies
typically charge a 3% service charge on balance transfers now.

Hank
 
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H

Hank

Have you looked in the loans section when you are logged onto internet
banking? If you click on apply, personal loans, you should be able to see
how much they will provisionally lend you and at what APR.
I didn't see that when I logged on this morning. I will look again.
What I logged on this morning, I found an 'apply for loan' link which
took me to a form asking me to divulge a lot of sensitive information,
such as my income, and how much I owe to other banks etc.
They are
currently offering me 6.9%, I would certainly never take a loan out with
them at their standard rate.
Their standard rate is 9.9%. How did you get the 6.9% offer? Is the
standard rate usually negotiable? If so, does successful negotiation
depend on having had a lower offer from another lender?

Hank
 
R

Ronald Raygun

Hank said:
It's good advice, thanks. My credit card debt seems to have hovered
around the £50,000 mark for several years. I plan to get a steady job'
soon, so I can wittle down the debt. But I'd still like to minimise
the interest I'm paying. Can't afford to pay off much capital untill I
land the hoped-for steady job.
Typical credit card interest rates are 2% a month. You can afford to
pay £1000 a month interest with no steady job?
 
H

Hank

Typical credit card interest rates are 2% a month. You can afford to
pay £1000 a month interest with no steady job?
No, I'm not charged anything like 2% a month. I hope it stays that
way, otherwise I'd have real problems.

Hank
 
J

John Boyle

Ronald said:
Typical credit card interest rates are 2% a month. You can afford to
pay £1000 a month interest with no steady job?
It isnt the interest that would be the problem, it would be the minimum
monthly payment.
 
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S

Simon Finnigan

Hank said:
Yes, I always do that when possible. Trouble is, this is usually only
available to newly-opened card accounts, and I have already exploited
that to the max; I don't think there are any card-issuers left that I
don't already have cards with who would give me much credit. My credit
rating isprobably not that good since I lost my steady job, I have
only been paying the minimum payment on all my cards each month.

I owe about £50,000 on cards. A good portion of that is on a good
rate, such as 5.9% for the life of the balance. But about £10,000 is
on higher rate cards. One of them will go up from 3.9% to 27% if I
don't pay it off by May. I often juggling of balances to take
advantage of balance transfer rate offers, but card companies
typically charge a 3% service charge on balance transfers now.

I hope you`re doing your sums correctly to check that you`re saving money by
transferring the balance, that 3% can make a VERY big difference to whether
it`s a good idea to do it or not.

Do you own a house, or have any other significant assetts?
 
T

Tim

It isnt the interest that would be the problem,
it would be the minimum monthly payment.
If it were MBNA, the minimum payment *is* just "interest + £5".
[ + payment protection premium, which I
assume they didn't take out 'cos it's a rip-off.]
 
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S

Snuggles

Hank said:
I didn't see that when I logged on this morning. I will look again.
What I logged on this morning, I found an 'apply for loan' link which
took me to a form asking me to divulge a lot of sensitive information,
such as my income, and how much I owe to other banks etc.
When I click on "apply for" then "personal loan", the first page which comes
up says "we will lend you £xxxxx today at a preferential rate of 6.7% APR
(not 6.9 like I thought). I have had a loan with them previously, perhaps
this makes a difference.
Their standard rate is 9.9%. How did you get the 6.9% offer? Is the
standard rate usually negotiable? If so, does successful negotiation
depend on having had a lower offer from another lender?
Sorry, I can't really help there, I haven't negotiated with them or even
asked for a loan (I don't want one!). They just write every now and then
offering me one, and I can always see on internet banking how much they are
prepared to lend me.

Why not just give them a call?

Snuggles
 

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