Sainsburys declined me for a loan!

captain_69uk

Hello,

This is my first post so I want to say this is a great site and I am really grateful for the useful advice and information available here! :beer:

Now my post :

I applied for a Consolidation Loan for £14,999 with Sainsbury's over the phone today and was declined.

My annual income is £23,000 and I'm living at home.

I wanted to consolidate two loans and the balances are now £8,185 and £6,374. (Have other credit but only shows on Call Credit CRA and apparently Sainsbury's check Experian...).

Apparently the decision did not even go to the underwriters stage. It was declined immediately by the system. The lady asked the basic questions but did not even ask about what I would pay off with the loan or about my outgoings etc.

I was surprised because I calculated I should be able to afford the repayments even if offered a higher rate of interest than the advertised rate... (and even if I didn't actually consolidate my existing loans, which would leave me paying for old and new loans).

I have checked all the CRAs, have a good credit history (1 missed payment in 2006 on a settled acc), credit scores are 999 Experian, 506 Equifax and 616 / 4 Stars on Call Credit.

I am on the electoral role.

I checked all the credit files again just now and there are NO searches showing.

So how long does it take for checks to appear? Would they definitely do a check even if they decline you straight away like this?
Could I stand a better chance applying for a smaller amount with another lender?

Finally - I want to write to their Underwriters to ask for an explanation and appeal the decision... Can anyone offer any advice about this or tell me what information I could put in the letter that might help?

Many thanks for any help!

Beast

You're asking for £29,500 of available credit on a salary of £23k. This is the reason.

captain_69uk

Thank you for the quick reply!
So that's too much in total right? Ok, so for the sake of interest what would be the maximum existing debt I could have and have a good chance of being accepted for a consolidation loan (on the same salary)?

Is there any point in writing to the underwriters?

Thanks!

Beast

Around £11,000 total debt including your existing debts would be about the max considered so you're already way overcomitted unfortunately.

Kamen_Rider_W

Beast wrote: »

You're asking for £29,500 of available credit on a salary of £23k. This is the reason.

How do you work that out?

Beast

Kamen_Rider_W wrote: »

How do you work that out?

£8,185 and £6,374 + new loan of £14,999 = £29,558

Kamen_Rider_W

So existing loans are taken as credit owed even when you're taking out a new loan to pay those off? (Sorry to hijack the thread captain_69uk)

Beast

Yes - The lender has no guarantee that the new loan will be used to pay off existing credit.

captain_69uk

Thank you very much for the help Beast.
(That's ok Kamen)

My existing loans are with my two banks - would they be more inclined to consider me?

Also where do you find out the kind of information you obviously know? (I mean about ratios of earnings to debt etc?)

Thanks again!

fozmcfc

I would say your bank is the only place that might do this loan for you.

You would need to ask about refinancing the loan. The only thing is that having a £15,000 loan while earning £23,000 might not be possible even from your bank.

As beast has indicated, lenders generally will only lend to a certain amount, usually 50% of your salary.

Years ago that wasn't the case, which is why you have managed to get over 50% in the past, but lenders are getting so strict now.

Good luck, with the bank, but you really need to take control of your finances if you do get it and basically have no more outstanding debt.

captain_69uk

Ok thanks for all the replies.
I am thinking of applying for £5000 from my bank. Do you think it is even worth trying?
Thanks! :-)