Can I get a loan (and how quickly)

Semi_Quaver

Hi all,

A couple of details:

I just got a new job (started Monday 9th Aug). I'm now earning £20k. I was refused finance for a motorbike based on my previous three months bank statements. This is particularly frustrating because I'm looking to borrow about £8k and repay over 3 years which is roughly £250 per month (with interest). My new job sees me earning £4k more than my previous job i.e. I clear approx £300 per month more net than my previous job which is more than the repayments will be.

I believe I was refused because I'm ALWAYS in my overdraft.

The first question:

Can I get the cash elsewhere e.g. a loan from my bank (Natwest) or Tesco or Sainsburys etc or will they refuse me for the same reason despite the logic that the repayments will be below the extra that I'm earning each month?

The second question:

I've checked a few providers - Alliance & Leicester, Santander, Sainsburys & Tescos are all offering quite decent rates - 7.8% which means my repayments and total repaid will be the same with all of them - are there advantages of one above another, am I more than likely to be offered a loan from one these or from my current bank and roughly how quickly could I get approved and receive the money?

Many thanks for your time and expertise everybody

Beast

Do you have any other debts? I.e. store cards, credit cards, other loans etc?

Semi_Quaver

I went to University 2005-2008 (the final year pre-top up fees) and got a student loan, does that count towards anything considering such a small amount (if anything) is deducted each month...?

My overdraft limit is £1250 IIRC

I have £1800 out on a credit card which I only put onto the card this month and it will be repaid within a few weeks as I'm selling a couple of personal items to that value.

Beast

The problem is likely to be a combination of limited history of borrowing, credit commitments near 50% of your income (including the new loan), plus the fact that you're always in your overdraft.

A few months of managing your account better and clearing that credit card may help you. Other lenders are likely to take a similar view.

With regards to the advertised rates you should also be aware that you are extremely unlikely to get the advertised 7.9% rates. These are reserved for the perfect customer and given your position and the posts we've seen on these forums on similar subjects recently, you should probably expect the rate to be above 12%.

Semi_Quaver

Thanks for the replies thus far, very helpful.

Natwest advertises around 12% for the same loan, do you think it would be worth me popping into a branch for a chat? Is there any human element involved in loan authorisation or is it stone cold calculation? I ask this because I'd like to sit and discuss a loan with somebody (maybe at my bank?) and explain to them that even though I'm in my overdraft all the time, I am now have an extra disposable income which is £50 more than the monthly repayments would be. Also that I'm only really in my overdraft because I conciously decide to spend my money each month and that I have very few regular outgoings because I live with my girlfriend who pays the mortgage and 2/3 of all bills. The money that I HAVE to spend each month is approximately:

£85 Parking
£185 Trains
£120 Fuel
£30 Phone
£100 food / bills

= £520
My income as of this week is £1300 net per month which leaves £780... which is plenty for this loan...

Could I explain all of this to somebody at my bank and get them to approve the loan or is there no such flexibility?

Cheers,

SQ

Beast

It's unlikely to make any difference - they will have lending criteria which you just don't fit.

With that amount of cash spare you could have the money you need in 10 months and save a load of interests and years of payments.

Semi_Quaver

I think that realistically, it would take me a lot longer than 10 months to save that, what with the little extra expenditures that occur during a month e.g. a couple of cinema trips, a couple of nights out, a few lunches, a couple of items of clothing etc It would probably take 18 months if I worked at it. Frankly, I'm willing to pay the interest for the privilege of having the money and the bike sooner (I'm excited). I understand the implications and I don't feel much of an undertaking given my lack of mortgage etc.

I might just have to pop down to my local bank and see if there are any options that'll work.

If they outright refuse me, do you think it's likely that I could get approved in a month if I clear my credit card and spend a month back in the black?

Cheers,

SQ

CLAPTON

lets keep it simple
from a lenders point of view....... you are always in your OD so that means you have no spare cash to pay the loan back

so stay in the black for 3-6 months and apply again

and of course start to learn to budget and start to save for the future

Semi_Quaver

Wow, I never knew that about being overdrawn. I wish somebody would have told me, I would've axed my overdraft immediately after gaining employment post-university. I never had a reason to stay out of my overdraft, so I've never bothered! !!!!!!!

One of the things that's pushing me to find every available option is that due to the low / easy monthly repayments, I presumed I'd get the OK for finance on my bike without question and so I've already signed up for insurance for it and payed the first premium! !!!!!! again!

Hmn. Is there ANYTHING I could do to get approved? E.g. parental guarantor? Larger deposit / smaller borrowing amount e.g. Instead of asking to borrow the full £7k for my bike, I could possibly get £3k up front and ask to only borrow £4k over the same period (3 years) - or is it really as simple as you've said regarding being in the red and that I literally have zero options other than 1) somehow borrowing £7k from a friend OR 2) clearing my OD and waiting a few months before trying again?

Cheers,

SQ

Fiddlestick

Semi_Quaver wrote: »

Hmn. Is there ANYTHING I could do to get approved? E.g. parental guarantor? Larger deposit / smaller borrowing amount e.g. Instead of asking to borrow the full £7k for my bike, I could possibly get £3k up front and ask to only borrow £4k over the same period

What bike are you wanting that's 7k?

Semi_Quaver

a motorbike

it will save me a bit of cash in the long run (commuting)