How to get a Loan

SimGeorge

Hi I'm only 19 years old but am earning about £1350 a month after tax, i have about £200 going out for car insuarnce and rent a month and so am left with about £1150 as my own money to spend, the only problem is everywhere i ring up is refusing me loans. I have enquired at my bank to borrow £4,00 and pay back £120 a month for 4 years but they just refuse, ive tried other places such as tesco and things and everywhere just refuses, i can't have a bad rating because all that comes out of my bank every month is my phone bill....
Can anyone give any advice of what they think i should do?

Many Thanks

G

Raggs_2

I'll assume you meant 4000, not 400.

Next, best advice, wait 4 months? Save it?

Surely it's better to wait 4 months and pay 4000, than to get 4000 now and pay even more for years?

redpete

Factors that a lender might take into account (which are different to the 'credit rating' one of the agencies might give you) include:

• Are you on the electoral role
• Have you lived at your current address for long
• Have you worked for your current employer for long
• Do you have a history of managing credit successfully (e.g. credit card which you pay off each month)
• Do you have access to credit already (CC, overdraft or other loans) whether or not you have used it

As a 19 yr-old the answers to one or more of these might not be the ones that the lender would be looking for.

If you've got £1150 a month to spend as you please you could save the £4000 in 4 months - why not do this instead of taking a loan over 4 years?

(I know you haven't really got £1150 a month - you've already mentioned a regular phone bill and there will be other living expenses that you can't ignore.)

Tixy

You may well not have enough credit history to show that you will responsibly handle a £4k loan and make the repayments.

Also each time you apply to a new company this leaves a search on your credit file and too many searches in a short period make you look desperate for credit. As a guideline if your own bank refuses then other high street lenders are likely to as well.

Have you seen your credit report? you can get this free with an online trial or pay £2 each for the statutory reports.

What you need to do is start building a positive credit history - read this so you understand what you can do to improve things http://www.moneysavingexpert.com/loans/credit-rating-credit-score
What did you want the loan for? how much have you really got left after expenses each month (eg after petrol, road tax, car maintenance, phone, clothes, haircuts etc). How long would it take you to save £4k?

Bob_the_Saver

With "£1150 as my own money to spend" every month it won't take too long to save for it. This is the best possible advice at the moment with the economy in the state it is.

SimGeorge

Hi, after all expenses paid out and nights out and trips etc i probably have around £200 left which is why i want the loan, its for a new car.
as redpete said, I dont have a credit card, i live with my parents and i dont have access to overdraft or anything.
i just thought the banks would see that i have plenty of money each month to pay it back and agreed straight away, i dont want to have to go to somewhere that charges massive % APR because i think its wrong.

Thanks to everyone for their help and comments!!

G

sulkisu

I suspect that they looked at your earnings and outgoings and wondered why you need a loan in the first place. Explaining that you live at home (which means that your essential outgoings will be low), spend £200 p.m on car insurance and another £900 on going out, trips, clothes, and other non-essentials, won't fill them with confidence either. Before the credit crunch they probably would have given you the loan, but with the emphasis on responsible lending they will be understandably wary. Especially as you could save the money needed in a relatively short period of time - although it would mean cutting back on certain things for a while - and save yourself £1760 interest.

bouncydog1

£200 per month is not really enough to finance a new car with MOT, fuel costs, insurance etc. What happens if you have an accident and have to pay an excess - how are you going to fund that?

Before you think about buying a new car, you need to think about saving some money as you will still spend the amount you are spending out of your income now. I agree with other posters in that your bank has probably looked at your income, seen no savings and thought how are you going to fund a loan.

Better to make do with the car you have for the moment and get some savings behind you for the future.