Will we get a loan???

KARDJK

My other half has a couple of debts - nothing major - and wants to pay it all off with a loan so he just has one payment going out every month and which should lower the payments.

He has a credit card, car loan, overdraft and that all totals about 9-10k.

The problem is nowhere is accepting him for a loan. He's convinced that it is bad credit rating as he has had a couple of bank charges for unauthorised overdrafts (of £10-30) but I am not sure as we have just got a mortgage so the credit can't be that bad!

He has suggested we try it under both names to see if that makes it any better.

Does anyone know if this is likely to change the situation?

Can anyone think of a reason why he's not been accepted? Could it be the mortgage?

CLAPTON

has he checked whats on his credit files?
how much does he earn?
have you checked your credit files
how much do you earn
do you have any debt?

KARDJK

Only debt is mortgage. I have a small overdraft which is under 1000. Those are the only debts he has. We are on a combined income of about 40k, his being slightly higher than mine. we've not checked our files specifically but when we applied for the mortgage no concerns were raised and that was only 2 months ago.

KingElvis

Your bank is your best bet.

CHR15

Depends on lots of too many things to be certain.

Salary - he is owing £10k already - What percentage is this of his salary?

If he has been making lots of applications, he is unlikely to obtain a loan now (more than 3 applications in the ast 6 Months??) as it looks like desperation.

I wouldn't advise a Joint Loan, full of pitfalls. If your credit rating is suitable, how about you taking the loan out and giving him the money (another quandry)?

Generally speaking, if his level of debt (including the new loan being applied for) is more than 50% of his salary, he will struggle to be accepted.


EDIT: Forum is quick today

Using an overdraft is not going to look good to any lender, gives the impression he is unable to manage his finances already, let alone with more debt to repay.

KARDJK

that makes a lot more sense. thank you very much.

he's made 2 applications in the last month and both rejected. is that likely to cause a problem?

"I wouldn't advise a Joint Loan, full of pitfalls."

What sort of pitfalls are we talking about here?

CHR15

KARDJK wrote: »

"I wouldn't advise a Joint Loan, full of pitfalls."

What sort of pitfalls are we talking about here?

Mostly surrounding the repurcussions if you separate. There are literally hundreds of posts where this happens and one ends up carry the can for the entire repayments.

Joint loans aren't taken out be people who are thinking of splitting up....but it happens, with complicated consequences.

CLAPTON

best look at your credit records; mortgages are different to ordinary loans as they are secured

he needs to be aware that living regularly in an overdraft is seen to show that he can't manage to live within his means so how can be afford to repay a new loan

are you both on the electoral roll at your new address and does it show on your credit records (another reason to have a look at them)

if he has debts of 10k and he applies for a loan of 10k then the lender will see his potential indebtness as 20k (you may know he will use the money to transfer other debt but they don't): and 20k debt on say an income of 25k is huge and just isn't likely to happen.

in any event unless the APR of the new loan is less than his current loans/debts then it wouldn't help a lot

a joint loan may be a possibility as you have a relatively low level of debt but check the credit file first

and of course start to budget properly; I'm sure moving has been expensive but you do have a pretty large debt

KARDJK

it's from being a student and training up on a very low wage!

we both live off the wages we have and our debts are from student days (except the car loan). we aren't increasing our debts and are managing - the reason he wants the loan is to pay it all off and to have one debt as the average loan rate means he would be paying less overall than if he is paying three different things.

CHR15

Are you concentrating your repayments properly?

Firstly, get out of the overdraft...and don't go back in it. The use of the overdraft will not look good to any lender.

Once out, start paying minimum payments on the debt with the lowest apr, concentrate all the spare cash into paying the debt with the highest apr.

Once that is done, more money will be freed up to concentrate on the next highest apr.

It isn't a quick fix, but it is the best method, especially if a new loan with a lower apr is not an option.