Car lease declined

CuriousUser

Hello to all of you,
Please consider moving this to the adequate section of the forum in case this is not in the right place.

I applied for a car lease through BMW, Alphabet and I was declined by the lender.
The lease is for £8,500 with an upfront payment of £2,600 followed by monthly payments for 2 years. Now I get a car allowance for that which comes to a total of £5,000 in 2 years.

My credit report is showing the following:
Income annual £24,000 (excluding bonuses)
I have used 33% of my available credit, 24 settled accounts with no late payments or anything for 6 years , all showing green on my report with Equifax (I moved to the UK 6 years ago so that's why only 6 years) cumulating roughly £35,000 paid.

What options do I have? Can I challenge the decision in any way? Is there anything wrong with my credit report?


Kind regards,
Flo

Willing2Learn

• How long have you lived at your current address?
• Are registered on the Electoral Register at your current address? If so, how long?
• Are all your credit accounts listed on your credit files registered for the same address?

CuriousUser

I moved where I live now in April 2019, previously lived for 2 years and a bit at a different address in the same city and prior to that for another 3 years at another one. On all my name registered on the council tax and bill paid by me in full.

I have been on the electoral vote since 2013 apart from half a year in 2016 according to the lender as they asked me why I was not registered (It might be the case that I was not on the open register if that's possible?! As I really don't know why or remember)

My credit accounts opened and settled match the address I was living and those still active have been updated with my current address when I moved house.

Ben8282

I very much doubt that your CREDIT REPORT is showing 'Income Annual £24,000' as claimed because this information is not contained in credit reports!

24 SETTLED ACCOUNTS in less than 6 years? What are these accounts? Payday loans?

You are using 33% of your available credit. That utilisation % taken in isolation looks fine but what exactly is your total available credit and how much debt does this 33% represent in relation to your annual income?

If you have money available to fund an upfront payment then why are you in debt?

The best option for you is to forget the PCP lease and use the money you have to buy yourself a reasonable second hand car that will be yours. You do NOT need a BMW.

CuriousUser

Okay, it looks like you like having a rant before understanding the situation but I will explain.

They asked me for the last 3 payslips from work and proof of my income so £24,000 excluding bonuses is the income I am contracted for.
All my credit cards have around £11,000 available balance that's including the 33% used at the moment.
The 24 accounts settled represent the accounts opened for electricity, phone bills, credit cards paid off. I moved house a few times in 6 years so I had to open new accounts for utilities each time which were settled when moving out.

I own a 16 plate BMW bought outright which I am selling it for something cheaper to run, less costly monthly. Using my car allowance from the company and free fuel (electric charging points through work) will bring the cost to half considering what I pay for maintenance for the car I own + devaluation of it year to year.

If you have something constructive please do so, if not please find a different post.

Ben8282

I appreciate that the 26 settled accounts were mainly for utility bills but unfortunately this has done you no favours. Firstly, it has reduced the average age of your accounts. My average account age is a 3 figure number boosted by some very old accounts. Your average account age must be a single digit number which is not good as lenders like a larger average account age figure. You also mention closing credit card accounts (plural) when they were paid off. Again, an unwise move both in terms of your utilisation % and in terms of average account age.
You have clearly moved home several times over the last 6 years. This indicates instability and lenders like to see stability. Frequent change of address bothers them. Lenders prefer people who remain for long periods at the same address. The fact that you have lived at your current address for less than six months could well be a factor in the decline.
With regard to the PCP, the amount repayable over 2 years would be £5900, assuming that no interest was added to the figures stated. which is £491.66 per-month. As you pay your own utility bills I assume that you pay rent . Perhaps with an income of only £24,000 pa the lender thought that you would be unable to meet this payment after paying your rent, council tax, utility bills and credit card repayments. It is a large proportion of your income to commit.

AnotherJoe

Ben8282 wrote: »

I appreciate that the 26 settled accounts were mainly for utility bills but unfortunately this has done you no favours. Firstly, it has reduced the average age of your accounts. My average account age is a 3 figure number boosted by some very old accounts. .

Your average accounts are in excess of 100 years old?

You are Dorian Gray and I claim my £5.

Ben8282

AnotherJoe wrote: »

Your average accounts are in excess of 100 years old?

You are Dorian Gray and I claim my £5.

Average account age is shown in MONTHS not years.

CuriousUser

Ben8282 wrote: »

I appreciate that the 26 settled accounts were mainly for utility bills but unfortunately this has done you no favours. Firstly, it has reduced the average age of your accounts. My average account age is a 3 figure number boosted by some very old accounts. Your average account age must be a single digit number which is not good as lenders like a larger average account age figure. You also mention closing credit card accounts (plural) when they were paid off. Again, an unwise move both in terms of your utilisation % and in terms of average account age.
You have clearly moved home several times over the last 6 years. This indicates instability and lenders like to see stability. Frequent change of address bothers them. Lenders prefer people who remain for long periods at the same address. The fact that you have lived at your current address for less than six months could well be a factor in the decline.
With regard to the PCP, the amount repayable over 2 years would be £5900, assuming that no interest was added to the figures stated. which is £491.66 per-month. As you pay your own utility bills I assume that you pay rent . Perhaps with an income of only £24,000 pa the lender thought that you would be unable to meet this payment after paying your rent, council tax, utility bills and credit card repayments. It is a large proportion of your income to commit.

Thank you for your input. I decided to sell the car I own which will be roughly £15k with a bit of luck or £13,5k webuyanycar and then pay off the credit cards approx £4k total debt. I live with my girlfriend so everything comes out of my bank account in terms of utility bills/rent but we share the cost /2 for almost everything. Now I hope this will increase my chances to reapply in 3-4 months as the % of debt will drop significantly and also it will reduce the monthly payments.
I know that moving houses isn't ideal but after 2 years on 2 occasions the rent increased from £700 to £800 and £850 so had to find a different house. I live in York which is quite expensive (nothing like London ofc)

lopsyfa

Why not use the money from selling your current car that is owned outright to buy your new car and clear your credit cards? You can then build up new savings from the monthly amount you will have paid for the loan. This will save you some interest and means you will essentially have no debt.

That is assuming you are not planning to use the proceeds from the car loan for something else.

CuriousUser

lopsyfa wrote: »

Why not use the money from selling your current car that is owned outright to buy your new car and clear your credit cards? You can then build up new savings from the monthly amount you will have paid for the loan. This will save you some interest and means you will essentially have no debt.

That is assuming you are not planning to use the proceeds from the car loan for something else.

A big chunk of that money from the car goes into savings for buying a house. Now the priority is to reduce my monthly cost and make it predictable with no surprises. Knowing that I am no responsible for the car (maintenance wise and losing value over time) and paying the same amount each month is giving me the advantage of knowing how much I will need to cover the cost for a month and put aside the rest into savings. Now the car I have now is out of warranty and requires servicing and consumables which can be extremely expensive.