Hi,

I currently have a loan and 2 credit cards with balances.

I want to get a consolidation loan (unsecured) for my current loan and credit cards as I'm about to move house and want to free up some cash.

I have never missed a payment on a loan and have had one since I was 18, am currently 25, I have pretty much always had credit cards as well, and in that time I have missed 1 payment, which was a cc payment and was simply due to me not putting the payment through in time.

When I use your online credit check, it gives me a rating of good, and using the deatils at the bottom of this thread http://www.moneysupermarket.com/c/articles/money/how-to-improve-your-credit-score/ it actually comes out for me as 90% - Excellent simply due to the 1 payment I missed over a year ago.

I applied for a loan with AA loans it asked me to phone to supply more details, I phoned and they told me it had been accepted, but after me telling them I didn't want PPI, they told me the interest rate would not be the 6.odd% they were quoting, but 9%. I don't understand why, I earn good money, and borrowing quite a bit admitably, but less than 75% of yearly income which was their specification, and I have borrowed a similar amount on my current loan a few years ago and earned a lot less then. Any ideas why they might be quoting such a high interest rate?

This is the only credit I have applied for in the last 6 months.

Is it likely that it is just this company that is doing this, ie, if I apply for any other loans are they going to give me high interest, or is it completely different for each loan company. IE. I don't want to leave loads of footprints and dirty a good credit rating if they are all going to do the same thing and offer me a high interest rate.

I actually had someone phone me on your behalf that is a broker, exaplined to them and they are going to phone me back, but whether I actually get them to check for me or not will depend on this answer as I don't want to leave footprints if it's not going to get me anywhere.

Hope this makes sense and that you can help me understand whats going on.

so just to clarify.... did you say the apr is 9%??

Yeah, was 9.something I believe that they offered me.

Andy ideas, am I going to get the same response from someone like smile?

if you have no missed payments, ccjs, defaults then you will be classified as a prime customer meaning you can approach banks for a loan, each lenders have there own criteria that they use and go by. 9 sounds reasonable really but you can go and try it with other lenders but the thing is depending on there criteria you may not be accepted.

do not go applying with every company because all you are doing is alot of credit searchs at short space of time. your credit may be good but they may base it on affordability, have you got alot of credits cards or store cards open with a credit limit on it?? in fact have you check your profile with experian to see what information lenders can see because that usually helps. there may be something against you which could have been done by mistake and obviously you know nothing about it.

The only thing i can think is maybe they want more protection in case you lose you job or couldnt work? im assuming it will be a fairly large amount you will be loaning over a number of years so they probably need you to pay the PPI as an insurance for themselves.

Hi Andy

Did A&L actually offer you the loan at the lower rate and then offer you a higher rate after you'd declined PPI? If so, then you should complain. The Financial Services Authority has been investigating PPI selling practices and lenders are not supposed to make PPI a conditional part of a loan offer - therefore if A&L initially offered you a loan at the lower rate they shouldn't have revoked that offer because you said you didn't want PPI.

Initially you should complain to A&L directly. If after eight weeks you haven't heard anything back, or you are not satisfied with the reply you can take your complaint to the Financial Ombudsman Service http://www.financial-ombudsman.org.uk/default.htm - there are some tips and advice on the FOS website so it is worth having a look before you write to A&L.

Has anyone else had a similar experience with A&L, or any other loan provider? If you have I'd be really interested to hear from you as this practice is supposed to have been stamped out. If it seems to be a widespread problem I think it needs looking into further.

Clare

Hi Clare

I think you need to read the posts a little closer. Andy applied for a loan with the AA not A&L. A&L do not have a sub 7% loan as your loans search tool confirms but AA do.

Also Andy didn't say he was offered a lower rate and then a higher rate after taking of the insurance

I am not sure that your answer here doesn't have a political motivation rather than a desire to answer the questions raised and if that is the acse is that an abuse of power?

cerbius

my apologies. I had misread but I can assure you, I have absolutely no political motivation. My response to Andy remains the same as it doesn't matter who the provider is, whether it be AA, A&L or any other lender. Having re-read Andy's post it still sounds as though he was initially accepted on the lower rate and it was after he declined PPI that a higher rate was offered. If that is the case I believe he should complain.

However, as you will see from my reply to him, my first question was to ask whether or not that was the case. If it wasn't and he had never actually been offered the sub-7% rate then the situation is slightly different. Many lenders advertise typical APRs which only have to be offered to two thirds of successful applicants. The remaining third could be offered higher rates. It may be that this is what happened to Andy and that the higher rate is because of his credit score and not because of the PPI.

I was trying to be helpful and hopefully Andy will see it that way. Once again I apologise if my response was interpreted in any other way.

Thanks for the responses everyone.

Claire, I've got to be honest and admit that the thought did cross my mind that they may have done it because I did not take PPI as they did tell me I had been accepted, then asked about PPI, then said, "oh, but the interest rate won't be x, it will be y" kind of thing. I don't really see any point in complaining though, because once I had said I was't interested they said they would remove it from the system, so how you proove such a thing!?!?

I'm going to try through on of the other banks, possibly smile or similar, the reason I was confused is because I found the AA loan using the smart search on here, which I thought referenced the equifax file in some way? Like I say, I can't see that it would be due to affordability, as the repayments will significantly less than I am paying on my current loan, and will also clear a credit card that I have, and monthly repayments are not an issue.

I'll let you know how I get on.

Thanks

Andy.

Hi Andy

The Smart Search tool aims to identify the loan or credit card deals you are likely to be accepted for - it goes as far as it can without actually doing an application which would leave a footprint on your credit file. However, because it doesn't do a full application even though you appear to be eligible in principle there is no guarantee that your application will be accepted as ultimately the decision is at the lender's discretion.

Having said that, and this is why I asked originally if you'd actually been offered the lower rate by AA, it sounds as though the 9% plus rate that you were offered, may not have been down to your credit score but because you declined PPI. As you say it's very difficult to prove that the rate you were offered changed after you said you didn't want PPI and this is a potential problem. Lenders make a lot of money from PPI (an estimated £5billion a year in total!) so borrowers who decide not to take it are obviously not as profitable for them. They are not supposed to make PPI a condition of the loan offer, nor are they supposed to load the interest rate for those who don't want the protection. However, many consumers don't know this and my concern is that some lenders could still be employing such practises and getting away with it because of customer inertia. And it is the consumer who is the ultimate loser - they either end up paying more for their loan than they were expecting or they decide not to take the deal they applied for, which potentially affects their credit score and reduces the chance of qualifying from the most competitive deals elsewhere.

Let me know how you get on - but remember that you don't have to take PPI. So if the next lender you apply to does a similar thing ask why the rate is so much higher. If the adviser says that it is because you don't want PPI then tell them that you know they are not supposed to act in this way and that you will complain to the FSA.

Good luck!

Clare