Declined a loan - need a car now. What should I do next?

unexploded

Thanks OA234 and Bermonia. It makes more sense that the previous finance not being cleared off my credit report yet being the problem. I'm hoping that's all it is.

Which then makes me question - if they can't see I have paid off my car finance two weeks ago, how can they see that loan application if I apply for car finance this week, or even the same day? Is that real time but cleared debt isn't?

Good point about the credit cards actually, didn't consider the limits being potential for debt, in the eyes of creditors. Though now you've said that it makes sense. I've got a few with pretty decent limits, one in use as mentioned. So closing down at least one of those would be a good move then.

I just find the whole thing deflating considering my debt is relatively small, and could be paid off comfortably. Isn't the whole thing about credit that you can't have credit without a little bit of debt?!

MallyGirl

searches and applications are applied pretty quickly but lenders may only update the CRAs with balance once a month, then the CRA turns their big handle once a month, so if the timing falls badly it can take a couple of months for completed accounts to show as such.

System

unexploded wrote: »

Just to make clear here, I was taking a loan out over five years. A few grand a year is very manageable on my salary. Or am I missing something?

It quite clearly isn't given you're having to buy a car on finance. A few grand on a £20k salary is almost 20% of your take home pay, a mad amount to be spending on a car. The fact it is 20% of your take home pay is probably the reason you're failing applications as you're not meeting the affordability tests.

AliceBanned

I just find the whole thing deflating considering my debt is relatively small, and could be paid off comfortably. Isn't the whole thing about credit that you can't have credit without a little bit of debt?![/QUOTE]

Not exactly. A history of borrowing and repayment is probably better than current debt, however small, in the eyes of lenders. But I agree your level of debt is small. There are many factors and it is frustrating but the way I look at it is when lenders don't offer what I want it has taught me better money management.

unexploded

Tarambor wrote: »

It quite clearly isn't given you're having to buy a car on finance. A few grand on a £20k salary is almost 20% of your take home pay, a mad amount to be spending on a car. The fact it is 20% of your take home pay is probably the reason you're failing applications as you're not meeting the affordability tests.

I'm not sure how old you are Tarambor, but 20% expenditure of income on transport for my age group is probably about right. I can only assume from your remark about that amount of loan not being affordable as I'm having to buy a car on finance (I'm not having to, btw), that I should buy a car out right. Well there's certainly no point buying a new car outright, and I've had PCP deals which work out cheaper over their term than I've had second hand cars in half the time. Choosing to have a loan this time round is because it's a car I would quite like to own.

unexploded

AliceBanned wrote: »

Not exactly. A history of borrowing and repayment is probably better than current debt, however small, in the eyes of lenders. But I agree your level of debt is small. There are many factors and it is frustrating but the way I look at it is when lenders don't offer what I want it has taught me better money management.

Yes indeed. I was being a little sarcastic As I say, never had a problem with repayments before. I suspect much of this is to do with my existing finance not off my record yet.

Oh and totally agree with your last statement. Started my business up in the recession when I was pretty young. None of the bailed out banks wanted to loan at that point. Made me determined to build it up out of my own money and been running a profitable, tight ship since.

AliceBanned

I see. Yes it can feel a bit 'you're damned if you do and you're damned if you don't'. Sounds like you've found the reason anyway. Good luck with it.


As an aside I find the Motoring Board on here (especially 'Bangernomics;)) really helpful if you go for an older motor or even to help you decide what car is best for you. I have managed to run under £2k cars cheaply for many years but this may not be your thing and arguably for some it can work out more expensive. I've mainly been forced into it due to bad credit in the past but it can be quite satisfying not to have to spend more than £2k on a car and it last for quite some years.

System

unexploded wrote: »

I'm not sure how old you are Tarambor, but 20% expenditure of income on transport for my age group is probably about right..

Heading towards 50 so if you're referring to younger age groups I've already been through it. NEVER spent 20% of my income on paying for purchasing a car. I may have spent 20% all in including fuel as I live in a rural county without PT and need to travel 15-17k a year but you're not doing that as the 20% only meets the finance, not the running costs.

And just because it is normal within your age group doesn't make it right. I bet the majority of them broke like you as well living on credit so how well is being like everyone else working out for you all? Not very good so surely if it doesn't work then perhaps you should do it differently to them and then when you get further on in life you're not sat there still skint with five figure levels of debt thinking about a miserably poor retirement that you'll likely still have to work in.

John_G_Jones

I used to have a rule that I would never spend more than 10% of my gross income on a car, which of course meant that ai was spending significantly than 10% each year.

I’ve relaxed that a fair bit now as I’m getting into middle age, and comfortably off, and don’t need to be as cautious as I once was, but I still spend under 5% of my wage each year in total on motoring, which is for a couple of cars and a couple of bikes.

20% a year does sound extremely high.