What do banks consider a large loan?

essex.cyclist
essex.cyclist Posts: 58 Forumite
in Loans
Hi all


Looking at a £10k loan but could probably reduce that a little if needs be, maybe down to £7.5 / 8k.


Is this sort of difference of an relevance to the bank?


Do they consider £10k as a big loan to try and be approved for?


Thanks
«134567

Comments

  • Westminster
    Westminster Posts: 1,004 Forumite
    First Post First Anniversary Savvy Shopper! Debt-free and Proud!
    Too many variables to answer that question.

    To somebody who earns £150k per year and no existing debt / mortgage, a 25k loan is very small.

    To someone who earns minimum wage with loads of existing debt, a £1k debt is very large.
  • essex.cyclist
    essex.cyclist Posts: 58 Forumite
    Fair comment.


    I earn £45k per year, have over 30% equity on a £350k house, but have £12k in credit card debt (with approx. 5k spare) and have gone as far as £2k into my £2.5k overdraft in the previous few months, though currently sit outside it.


    Do you think I should consider lowering the £10k amount or will it make little or no difference?


    Thanks
  • Westminster
    Westminster Posts: 1,004 Forumite
    First Post First Anniversary Savvy Shopper! Debt-free and Proud!
    A rough figure that comes up on here from time to time is to limit unsecured debt to half your salary so 10k may take you to the top of that.

    Didn't I see you mention elsewhere that you already had a Nationwide quote of 3.3% - if that was for 10k then I presume they will be happy to proceed.

    Obviously conventional thinking on here is that you want to keep debt to an absolute minimum (or ideally none at all) so do you really need as much as 10k?
  • TrustyOven
    TrustyOven Posts: 746 Forumite
    First Anniversary First Post Combo Breaker
    essex.cyclist wrote: »
    Fair comment.


    I earn £45k per year, have over 30% equity on a £350k house, but have £12k in credit card debt (with approx. 5k spare) and have gone as far as £2k into my £2.5k overdraft in the previous few months, though currently sit outside it.


    Do you think I should consider lowering the £10k amount or will it make little or no difference?


    Thanks


    "Wow!!! Ouch!! 45k income and 12k debts and overdraft usage... and wants more debts?? Decline!"

    That's possibly how the banks will view it....
    Goals
    Save £12k in 2017 #016 (£4212.06 / £10k) (42.12%)
    Save £12k in 2016 #041 (£4558.28 / £6k) (75.97%)
    Save £12k in 2014 #192 (£4115.62 / £5k) (82.3%)
  • essex.cyclist
    essex.cyclist Posts: 58 Forumite
    10k would be perfect for me at this stage, but could cope with less if required.


    I have been offered a 3.3% loan following an initial application but am still pondering to go with the full application as I am concerned I might be rejected because of my credit cards and overdraft.


    Maybe it's a case of giving it a go and seeing what happens.
  • essex.cyclist
    essex.cyclist Posts: 58 Forumite
    TrustyOven wrote: »
    "Wow!!! Ouch!! 45k income and 12k debts and overdraft usage... and wants more debts?? Decline!"

    That's possibly how the banks will view it....





    So they turn down applicants if they have existing debt then?


    If so, why have 'consolidate debt' as a reason for the loan?
  • [Deleted User]
    [Deleted User] Posts: 35,242 Forumite
    First Anniversary Photogenic Name Dropper First Post
    They turn down SOME applicants who want to consolidate. Mainly because those applicants aren't usually very good at borrowing money.
  • essex.cyclist
    essex.cyclist Posts: 58 Forumite
    Okay, thanks.


    I have never missed a payment on my credit cards or mortgage and have a history of clearing those debts, so I hope I wouldn't fall into that category, but I suppose that is for them to judge rather than me!
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    Name Dropper First Post Photogenic First Anniversary
    Have you or have you not been offered a £10k loan at 3.3% APR? What is this initial application you have made? If a lender has already offered you a £10k loan at 3.3% APR then our opinions on what constitutes a big loan doesn't really matter.

    If the 3.3% APR is just an illustration then there's no way of telling what a lender will lend you (if they decide to lend to you) until you complete the application and a full credit search is carried out. Given that the majority of lenders offer their best interest rates for loans from £7.5k to £15k I wouldn't say that lenders consider a £10k loan particularly large. £10k is about a third of the maximum loan value UK lenders offer.

    Think carefully before consolidating. It's not that consolidating itself is bad per se but if you haven't addressed the reason(s) why you have £12k on CC and have been plunging into your overdraft for the past few months then consolidating won't help you.
  • essex.cyclist
    essex.cyclist Posts: 58 Forumite
    Thanks for your advice Pixie.


    At this stage it was just the initial offer before the full application - so no credit search etc.


    Appreciate your views re: size.


    I have thought this through a great deal and it would work very well for me, considering how I am paid and how this would allow me to pay off my debts.


    I think I'll apply and see how it goes - thankfully it's not a disaster if I am rejected. Recently re-mortgaged, so credit check won't impact on me, I don't think.
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