Declined for a loan, can anyone explain?

Berto

Hi,

I recently applied to tesco's for a loan of £16500 to get a new car and settle an outstanding loan of £7000 and I was turned down.

I earn approx £24-30K a year (depends on bonus), I have worked for my employer for nearly 8yrs, lived in/owned the same house for close to 4yrs and am married.

I've checked my credit file and it shows as current:
I have 3 current bank accounts (2 personal and 1 joint, i've now asked for one of my personal accounts to be closed as it was not used)
2 credit cards (closed 1 down today leaving a balance of £2000 on remaining card)
my loan £7000
Our mortgage
An old vodafone contract (that I though had been cancelled but is soon to be so - this is showing at an old address tho?)
and 2 previous loans (both settled)

Checking my file shows I have 3 consecutive default payments on one of my credit cards- this was a result of me thinking i'd cancelled the card, moving address and them adding card protection payments, meaning I did not realise there was a balance to be paid until I got a phone call and them i immediatley paid the full balance.
Also I had 1 late payment on an old loan that finished may last year. So in 5 yrs I have missed 4 payments none in the last year.

I have also notice that my bank (who I have been with for 17yrs) have my DOB incorrect.

Would my late payments and incorrect DOB have caused this decision and if I get my DOB ammended would it make a difference?

I have asked my bank to update my details, asked for 1 unused bank account to be closed and cancelled 1 credit card is there anything else I can do or should I try a different lender?

Thanks

Beast

The fact that you have defaulted on payments and are asking to borrow 97% of your base salary means its an absolute non starter.

Berto

So 1 late payment that was my fault over a yr ago, 1 was the credit cards 18 months ago and 97% (not sure how you got that figure) and that it? No go, final answer.
I am asking to borrow the money over 8 yrs paying back each month the same amount I have been paying for the last 4 yrs and never missed a payment on that loan, do they not take that into account? My last loan was for £14000 4 yrs back and I got accepted for that, does 1or 2 simple slips really have such a dramatic effect?
Should I be looking at other lenders or simply forget it?

Beast

I'd simply forget it - the ratio of debt to salary is way too high for any lender to consider.

CLAPTON

your salary is 24k

your existing debts are 7000 loan +2000 cc so 9k
you want to borrow 16.5k
so lenders will see your total debt as 25.5K... more than your current salary
no responsible lender would even consider such a high risk costomer

now you may be intending to pay off the 7k loan (why?) but they don't know that and anyway there is no certainty that you will.

Berto

CLAPTON wrote: »

your salary is 24k

your existing debts are 7000 loan +2000 cc so 9k
you want to borrow 16.5k
so lenders will see your total debt as 25.5K... more than your current salary
no responsible lender would even consider such a high risk costomer

now you may be intending to pay off the 7k loan (why?) but they don't know that and anyway there is no certainty that you will.

Ok thanks for that, makes sense.

The car i'm looking at is £9500 and my loan is £7000, so total is £16500, would I be better off going to my existing loan company and asking them to extend my loan by £9500?

CLAPTON

Berto wrote: »

Ok thanks for that, makes sense.

The car i'm looking at is £9500 and my loan is £7000, so total is £16500, would I be better off going to my existing loan company and asking them to extend my loan by £9500?

why do you want to refinance the 7k loan.. is the APR high or what?

think no more than half your salary as a total debt figure

Beast

Berto wrote: »

Ok thanks for that, makes sense.

The car i'm looking at is £9500 and my loan is £7000, so total is £16500, would I be better off going to my existing loan company and asking them to extend my loan by £9500?

It's still almost 70% of debt to income. The acceptable ratio for most lenders these days is below 50% for customers with perfect credit history.

Berto

I just dont want 2 lots of debt payments again, I did that for 3 yrs and it meant some months were quite tight. The payments I have at the moment are perfect for me, I dont want to add a second monthly loan amount as I will struggle, i simply wanted to consolidate my loan and car payments into one and extend my current commitment not double my months loan payments.

Beast

Berto wrote: »

I just dont want 2 lots of debt payments again, I did that for 3 yrs and it meant some months were quite tight. The payments I have at the moment are perfect for me, I dont want to add a second monthly loan amount as I will struggle, i simply wanted to consolidate my loan and car payments into one and extend my current commitment not double my months loan payments.

Maybe just don't buy an expensive new car then?

Berto

^^^LOL, so the issue is the amount not my file then? Hmm, might have a re think then, or see if I can sell one of our cars first then borrow less. I'd only need to borrow £7000 extra that way, oh well, i'll have a re think.

Thanks for the advise and help guys, i'm still going to get my details updated, it's not going to hurt.