Lloyds bank lending

saker75

Hi all

So my partner and I have had our first ever frank discussion about our finances.

And it transpires that he has a credit card debt with Lloyds bank. He owes £14k on a salary of £17k. He has had the card for years and the credit limit has increased steadily, clearly with no reference to income.

We have to pay this back but I'm pretty surprised that a bank would lend at such a debt-to-income ratio. It has increased way beyond his salary - 88% of his income!

meer53

You are given the option to refuse a credit limit increase before they increase it. Has he ever let them know what his salary is ?

IAmWales

Are you surprised that he has borrowed at such a debt to income ratio?

Sooler

They will have judged he has other assets available that cover their liability should they at any time need to take enforcement measures to recover their money.

DoaM

Sooler wrote: »

They will have judged he has other assets available that cover their liability

Such as?

Property? Probably mortgaged therefore cannot be used for security against other loans.

Car? May well be on PCP or HP or similar finance, so cannot be used for security against other loans.

What other assets could he have that would cover a £14k credit card bill?

(I agree that I'm making presumptions, but they are logical and probable).

[Deleted User]

Is your partner's name "Jeremy Corbyn"?

(I'll get my coat..... )

Seriously though, there's others on this forum better qualified than me to give advice on this, but check out the credit card section of the site.

Everyone is different of course, but if I'd say anything else it is would be -

that folk should be doing all they can to pay off debts while interest rates are low. When they rise, as they assuredly will at some point, I fear there will be many folk very seriously caught out with repayments they can't afford, and

if you (plural) have any savings, consider the balance of savings interest and monthly interest payments on the credit card. It is questionable sense to have significant savings, probably at low interest rates, if you are paying a higher interest rate on the debt. (Subject to having an emergency fund, of course.)

Apologies if this seems self evident but I know folk who didn't grasp that basic issue until it was pointed out to them :eek: .

Maybe time to repeat an old expression that my Dad used to use when times were financially tight - "something that costs a penny is too dear if you don't need it."

WR

IAmWales

Wild_Rover wrote: »

Is your partner's name "Jeremy Corbyn"?

(I'll get my coat..... )

I doubt Jeremy Corbyn is in debt. Stupid comment.

If you're referring to the Labour party, the national debt is currently c. £1.6 trillion, in comparison to c. £800 billion when the Labour party were last in power.

Very stupid comment.

saker75

The reason I posted in "Praise, Vent & Warnings" was because I didn't want to go down the usual "mis-sold loan" nonsense you get in other boards.

My partner banks with LLoyds and always has. He had no assets whatsoever.

I completely accept my partner's responsibility here. However I also believe that a bank like LLoyds should have internal processes that would flag up that such a debt-to-income ratio was of concern. It is about responsible lending as much as responsible borrowing.

We have to clear this and prioritise everything accordingly.

[Deleted User]

IAmWales wrote: »

I doubt Jeremy Corbyn is in debt. Stupid comment.

If you're referring to the Labour party, the national debt is currently c. £1.6 trillion, in comparison to c. £800 billion when the Labour party were last in power.

Very stupid comment.

I wasn't aware that JC was in any way influential in the policies adopted by the last Labour Government, was he? Just possibly, it was not a stupid comment at all.

(If you view every frivolous remark as a serious comment, you must be a hoot at social gatherings...;) )

Maybe I should have said Diane Abbott?

WR

[Deleted User]

saker75 wrote: »

The reason I posted in "Praise, Vent & Warnings" was because I didn't want to go down the usual "mis-sold loan" nonsense you get in other boards.

My partner banks with LLoyds and always has. He had no assets whatsoever.

I completely accept my partner's responsibility here. However I also believe that a bank like LLoyds should have internal processes that would flag up that such a debt-to-income ratio was of concern. It is about responsible lending as much as responsible borrowing.

We have to clear this and prioritise everything accordingly.

I know what you mean. It does seem odd that you are supposed to give an indication of income when applying for a credit card, but as long as at least the minimum monthly payments are made, the companies don't seem to take any 'interest' in card-holders income thereafter.... even when they offer/impose increasingly high credit levels.

Maybe if they were required to make that enquiry before each offer of a new credit limit, it might help? It might not prevent situations like your partner's, but you never know.

WR

lincroft1710

If he makes sufficient payments each month to reduce the debt and interest thereon, there is no problem. That is just what credit card providers like - steadily paying off the debt and the interest, it's how they make their money.

He'll probably find he will have paid back twice the amount he borrowed. So are Lloyds solely to blame for this situation?