Refused car finance PCP

LR2015

Hi, I’m thinking of buying a £40,000 car on PCP. The dealer I’m with had a car to my exact specification. I had a £11,000 deposit to put towards the car. However to my surprise I have been refused PCP car finance! I decided to repropose with a deposit of 20,000 including the value of the trade in of my current car and that was still refused! Rather confusing as at that figure I would have taken all of the risk out. They could repo the car the next day and they’d be in profit!

Just a little details about myself. I’m 20 and have been in employment for 6 months. My take home pay every month is around £1,800.

I also have a credit card which I use as a credit builder. I just buy stuff with it and pay it back pretty much immediately (I get points from it which contributes to an Amazon voucher for every 1000 points earned) Credit limit £1000

Also I have paypal credit which I use infrequently (Mainly to take advantage of the 4 months no interest on a purchase £150 or more) with credit limit of £1000

My outgoings include a loan which has one month left and my phone bill. Along with rent totals to about £200 every month. (I live with parents hence the small rent) You can add about £100 in food and living costs etc and I still have disposable income of around £1400 a month.

I could easily produce bank statements of my savings account which I deposit my disposable income into which would show I regularly deposit over £1000 a month into it.

I’m rather confused at the moment. The PCP works out at about 390-400 a month with 20k deposit which I can easily afford to pay every month. Same story with other brokers. Mainly concerned with my age!? I got an offer of a 10k loan with a guarantor with 50% apr!!!! I was told that was the best I could get.

[Deleted User]

Your lack of credit history, short term in employment, existing debt and insufficient income are the reasons you're being declined.

Clear the debt. Wait until your statement before clearing the card in full. Build some savings, get a cheaper car for now and then buy the car you want for cash in a year.

System

Whats your credit history look like? i imagine not very lengthy being only 20

Was it a payday loan you took out?

philbo2

Earns £22k and wants to buy a £40k car. A very succinct summary of modern life.

spadoosh

With all due respect your a million miles off how financing works.

Yes you live at home so are saving money, yes you have a large disposable income. BUT i assume youre looking at this over 5 years? Theres not many 25 year olds who live at home with outogings of a few hundred quid.

This is also something you should bear in mind. Id hope, for you, your life will change over the next 5 years which would mean proper adulting and its unlikely you will be left with much for car repayments.

Youre not buying that car unless your financing it yourself or putting down the vast majority of it. I think theyve done you a favour by refusing. What surprises me the most was there was someone willing to process the application, they mustve known you stood no chance.

Pixie5740

Two things are at play:

1) A relatively short amount of credit history

2) Affordability

I know you think you can afford it OP because of your low living costs but your loan to income ratio would be almost 1:1 and that doesn't look affordable to lenders. You might be living with your parents now but that option might not be available for the duration of the loan, none of us knows what's around the corner.

If the lender had to repossess the car the next day they would lose money. I don't know where you're getting the idea they would be making a profit.

DCFC79

Why not use the £11k or even less to buy a car, you have no finance to pay each month and if you spend less than the £11k you have some savings.

Willing2Learn

DCFC79 wrote: »

Why not use the £11k or even less to buy a car, you have no finance to pay each month and if you spend less than the £11k you have some savings.

This. You can get a nice car for £11K...

davidwood681

Bury yourself with a new car OP......

It might teach you a valuable life lesson

foxy-stoat

You can save over £16,000 a year - do that for as long as you can.

Buy a cheaper car - you dont need a £40,000 car, you really dont at 20.

gycraig_2

Average earnings champagne lifestyle.
If you have only been working 6 months where has the 20k come from ?.

Look at all the posts of people who did this and are now a year later questioning how they can get out from under the car that's burying them in debt and stopping them getting on in life

Hope for your sake no one lends the money