Reasons for being refused a loan

robabc

Hi All,

I've been reading through various topics, searched on this issue and used the credit rating checker on here.

So far this is what I've come up with as to why I was refused a loan for a car (£9000):

Experian credit check - 940 pts (means little according this site!)
MSE quick credit checker - good. (bad point is that I sometimes don't pay off my credit card off each month).
Debit card 1 - Positive
Debit card 2 - Graduate (80% of £1500 used, paying off slowly)
Credit card 1 - 65% used, paying it off slowly.
Credit card 2 - 50% used, usually pay it off in full each month.

Total credit available £3500 of which about £2500 is used each month but that amount is reducing.

Same house for 19 years
Single
25 years old
Earn £23000 p/a full time
Plus about £2000 self employed.

Missed a couple payments about 2 years ago on a credit card.

No dodgy past, never had another loan, etc. My bank said it was because I hadn't reduced my debt much in the last 2 years. (Only reason for that is that I've been lazy).

Would that really constitute towards a loan refusal? I have now made a plan to get my overdrafts and credit paid off over the next few months. I can understand their point, but it seems a little harsh.

I've just ready somewhere else that it could be due to the loan amount being above 50% of my net income - could this be it?

Thanks for any advice.

CLAPTON

maybe their concern is that if you haven't reduced your debt over the last few years then that means you have no spare money; so how can you afford to pay off their loan?


with 2,500 debt already plus your request for 9k more means you total debt would be 11.5k which is very high in relation to your modest income of 23,000.

and on a matter of terminology; debit cards don't have debts or credit balances; it;s your bank account that can be in debit (overdraft) or credit.

robabc

Thanks for your input- seems to make sense.

Get it paid off over the few months then try again a couple months after that seems like the solution.

CLAPTON

maybe apply for a little less too.

SeanG79

You would most probably be approved for vehicle finance as opposed to the personal loan. The criteria is less stringent because they have the car as security...Have you tried dealer finance? (Dont tell the dealer you have been declined for a personal loan) You should still be able to get a decent rate.

DCFC79

You could save up for it, you earn 23k so do you have much left over once all the bills are paid ?

somethingcorporate

Are you sure someone on such a modest salary should be buying a car for £9k? This is a money saving site and personally I don't think you have the income to buy it.

Perhaps you should set your sights a little lower...

victoria797

somethingcorporate wrote: »

Are you sure someone on such a modest salary should be buying a car for £9k? This is a money saving site and personally I don't think you have the income to buy it.

Perhaps you should set your sights a little lower...

Please note that he is 25,single and living at the same house for 19 years means he is living with his parents,so I take it not much outgoings.

As a previous poster suggested Car finance at a dealer would be the best option.

robabc

My total income is around 25,000 altogether. Not much different I know. I live in a section of my mums house and pay rent.

If I was controlled by my head I would save for 2 years and buy one then. However I *could do with* a car now. I know you may say buy a cheap one, but the fact is I've always bought cheaper cars, kept them for 6 months and sold them for a profit as I do my own maintenance but I'm a little tired of that now, but cars are my passion and hobby which is why some people may regard spending that amount on a car on my income is silly.

Finance was suggested to me by the dealer but after checking the finance company's website I thought a loan would suit me more. The reason being that I could sell the car easily if I decided to. I realise I can sell a car with finance owing as the buyer pays finance company.

The dealer was actually the person who made enquiries regarding the loan but I may call tomorrow and see what his attitude is when I mention finance as an alternative. Or I may not call.

Or I'll just forget it !

lethal0r

why not just try elsewhere for a loan? maybe try for a little less too.

you have a good credit profile, and the odd payment being missed won't be that much of a negative.

somethingcorporate

victoria797 wrote: »

Please note that he is 25,single and living at the same house for 19 years means he is living with his parents,so I take it not much outgoings.

As a previous poster suggested Car finance at a dealer would be the best option.

I read that.

Getting expensive and long term debt for a quickly depreciating asset is a sure fire way of preventing them changing that lifestyle!