Payday loan means being turned down for a mortgage in the future

liubeliu

grey_gym_sock wrote: »

i have some sympathy with ppl who are rejected by automated systems, when a human being looking at their record might agree that taking a PDL once some years ago was a 1-off. however, the automated systems are not new. and the general idea that PDLs are a very bad sign is (IMO) perfectly correct.

"ever" is, i take it, an exaggeration, because won't PDLs drop off your record after 6 years?

I agree, about 10 years ago I could have been in that position had such arrangements been available. I started a new job and due to an admin error I was not on the payroll and did not get paid. Had it not been for a simpathetic bank I would not have covered my mortgage payment.

If the bank was less sympathetic and PDL were available I would have taken that option until my employer paid my salary in. An automated system today would have blown me out without knowing the circumstances. I know of someone recently whose employer has had cashflow problems and asked them to accept pay a week or two late. Therefore people may be forced to use such arrangements for no fault of their own.

dunstonh

The PDL is viewed as high risk by conventional lenders. It is typically used by those desperate for money and in dire financial need. Not the sort of thing that a mainstream lender likes to see. It is very understandable and similar to the the position that existed prior to credit boom. Whilst PDL were not around then, the lenders used to look at statements to check your spending habits and certain things would go against you. During the credit boom, you could get away with anything and a lender would nearly always lend. Now we are back to sensible lending, you cant again.

PDL should never have gone mainstream. People have been sucked in by the them who perhaps would never have gone near one. However, they still must have been aware that the PDL is a last resort option. If they were not then they lack the financial awareness and responsibility to have a mortgage.

droiderm

Some of the statements on this thread are just ridiculous.

As someone else pointed out, it's may not be too different to using an overdraft authorised or not. You could argue that counts towards financial mismanagement.

For anyone to say one particular financial event at any point in someones life (or 6 years) dictates someone shouldn't be able to get a mortgage is beyond belief.

dunstonh

For anyone to say one particular financial event at any point in someones life (or 6 years) dictates someone shouldn't be able to get a mortgage is beyond belief.

For anyone to say that is beyond belief. Borrowing money is about character as well as ability. A PDL, a default, CCJ, arrears etc all go negatively against the individual. Anyone of those things may be a single event within the last 6 years and have an impact.

Typhoon2000

I wonder how long it will take mortgage companies to view those who can only pay the minimum balance on their credit cards in the same way.

droiderm

dunstonh wrote: »

For anyone to say that is beyond belief. Borrowing money is about character as well as ability. A PDL, a default, CCJ, arrears etc all go negatively against the individual. Anyone of those things may be a single event within the last 6 years and have an impact.

I am not saying any of those things shouldn't have an impact.
I am saying a pdl shouldn't be a show stopper.
I don't think any of the things you mentioned is always a show stopper.
There seems to an implication a pdl is worse. Which is ridiculous.
I accept it may be an indicator taken in current context.
At least convicts get to spend their crimes.

If i was a mortgage broker i wouldn't consider this a good thing either

dunstonh

I am saying a pdl shouldn't be a show stopper.

I agree with you there. It should be a negative addition to the set of scales which is how most will view it. If there are things on the positive side, then these can counter balance the negatives potentially.

Remember the Daily Mail likes to sensationalise. They probably have their one bank being the one with the most stringent criteria that always cherry picks the easy stuff and nearly always declines anyone with the slightest issue.

opinions4u

Typhoon2000 wrote: »

I wonder how long it will take mortgage companies to view those who can only pay the minimum balance on their credit cards in the same way.

It already is viewed negatively.

If you can't afford more than the minimum balance on a card how the hell do you expect to afford the mortgage?

JuicyJesus

kingstreet wrote: »

Not everyone will constantly roll-over payday loans, just as not everyone will always be overdrawn. Surely, the frequency of such usage should be more important than the source of the finance?

Perhaps your average overdraft user is a better "class" of customer and more deserving of a mortgage?

A payday loan is an expensive product that nobody in their right mind would want to take out except in the direst emergency where cash flow is so ridiculously tight that you or someone else would die were you not to take one. A creditworthy person would have to have their back pretty hard against the wall before even considering one.

Overdrafts on the other hand are far cheaper and, while equally possible to abuse, are a granted credit facility as opposed to an emergency cash-flow plug. I can understand someone who uses them being considered a better bet than someone who takes payday loans.

Thrugelmir

No savings. Then only months from financial disaster.

Not the foundations to undertake a 25 year commitment with.

The uproar on the article shows how normal being in debt is. Time to return to the basics of personal financial management.

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