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Banks Just Cannot Tell The Truth........

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I bank with Firstdirect.

I've paid off the mortgage and own my slave box.

I've a modest income paid into the bank and occasionally dip into a tiny over-draft..£100 / month max.

I've banked with them for at least 10 years.

I have a credit rating of 999...checked about 6 months ago

They advertise loans at 4% for Fd customers and I calculated that a new Vauxhall Corsa works out cheaper to borrow at 4% and negotiate a cash deal, rather than purchasing with Vauxhall's interest free scheme.

So I applied for a loan of 8K and get.........8.9%...!! 4% has become 8.9%

So they continue to lie and screw us over if we want to borrow.

Anyone had a similar experience?

(ps..Sorry if this sounds like a mumsnet whinge...but I'm mad as hell)

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I managed to take out a loan of £15k at 4.8% back in 2012. I was going to use the money as part payment for a house in Ireland that never worked out, so paid it back.

I did try to get a mortgage with them, but was turned away recently.

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I just checked the website and it does state 4%. An impossibly low rate IMO for an unsecured loan.

However they may take more into consideration than your credit score, such as income, monthly expenditure, usage of overdrafts etc.

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I have a credit rating of 999...checked about 6 months ago

When will this canard ever die? There's no such thing as a "credit rating".

Experian, Equifax and the other agencies only have RAW DATA about your accounts, and balances and payment records - nothing more. No ratings, scores, or opinions are held by them.

Then, each individual lender has their own formulas and criteria for turning that raw data into a decision as to whether to lend to you, how much interest to charge you, whether you're going to be profitable for them or not.

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An £8000 loan at 4% for one year is only £320 interest, it probably costs the bank £50 just to process all the paperwork - hence they are pushing you onto the higher rate.

the rate you receive is dependent on the amount you want to borrow

Also 8K is a low enough amount you will probably just pay it off quickly rather than rolling it over for years allowing the bank to make a fat profit.

You will probably find that you could borrow much more and get the lower rate,

£8,000 @ 8.9% = £712 per year

vs

£16,000@ 4% = £640 per year

Then you could just bank all the extra money you don't need (earning a bit of interest) and pay it all back at the end of the year

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I just checked the website and it does state 4%. An impossibly low rate IMO for an unsecured loan.

However they may take more into consideration than your credit score, such as income, monthly expenditure, usage of overdrafts etc.

To state a headline rate such as 4% the bank only has to provide this rate to 51% of applicants. It will pick the 51% who are most likely to borrow more, make late payements to invalidate the rate and those not able to pay back early. Otherwise, why would they do it?

the 4% rate is really just a form of advertising to enable them to reach the top of newspaper league tables (which are a really just manipulated advertising). You could go to Zopa and pay a little more or if you can get a credit card with an 8K limit you can do a balance transfer to another card (which has no balance on it) then take this cash and buy the card. Probably get 3-3.5% over 19-30 months.

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