Personal Loan Terms - page 2
Personal Loans appear simple but it's well worth checking the terms suit your needs
If the rate quoted on your personal loan is higher than you would like or expect, it's worth asking why the rate was quoted at that level - you'll then get a real for the realistic rate to expect from other sources.
Back to lenders checking your credit history - these checks have to be made, and you will have taken the precaution of having a look at your credit rating to ensure that all the facts which are included are correct. This is important because errors can occur and if not dealt with they could blight your credit rating for a long time; one certain effect of a negative in the rating is that you will have to pay higher interest rates.
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All being in order, your application has been submitted and the lender has let you have your offer, which remember is special and personal to you. It should be good but is it? Your first reaction may be that a mistake has been made - the offer which you have been given is quoting a higher percentage interest charge than the one advertised. This cannot be right - they cannot advertise one rate and charge another, can they? Oh yes they can, and the Consumer Credit Act (CCA) is quite clear on this point.
If the lender can claim that at least 66% of their clients have got the advertised rate (and these will be the ones with the best credit rating) then the remainder have to take what they can get, and the CCA fully supports this. Unfortunately the Office of Fair Trading stands little chance of checking on the '66%' claims, so there is not much hope of disputing the figures.
So what is to be done now? The usual reaction is to shop around for a better offer, but each time your credit rating is checked you gain another negative mark on it. Slowly but surely, and without borrowing so much as a 'tenner', your credit rating is sinking and a competitive loan is becoming more difficult to get. Offers received through a direct mailing for a personal quotation are even more fraught with dangers, because such are outside the rules covering advertised loans. In addition, each will generate a credit rating check, and add another footprint onto your record.
What is the answer? Firstly stick to advertised loans where you will at least have some legal protection and, secondly, having checked your rating and knowing what it is, try to pin down the lender to a narrow range of figures based on that rating and subject to them carrying out the necessary check only when you agree to it.
They want your business and are skilled in negotiation, but if you play your cards right you can get the upper hand. If you cannot get a satisfactory answer, walk out and try elsewhere (but always give them the opportunity to suggest a new rate); then, as long as a credit check has not been done by anyone there is no cost to you. It may take a little longer but it could save you a lot of money.
