Car lease

Uk_observer

Hi. Recently denied for a car lease and the funders will not give a reason why! Excellent credit rating, in the high 900’s in Experian, got £500 on a credit card that I pay off every month without fail, and have one car lease in our household ongoing. My wife then applied for this same car lease and was also rejected, again, no reason why, also has excellent rating, very small credit card that again is paid off every month. Earnings and outgoings same as when we applied for 1st car lease so nothing much changed, if anything, earnings have increased. Now I do have a bounce back loan, could this be the reason why it’s been rejected?

we’ve never been denied credit/finance before so a bit mystified and frustrated, any help greatly appreciated!

[Deleted User]

Your low card limits, existing indebtedness and tightened lending criteria are likely to be the reasons.

Your credit rating isn't a factor in lending, only your credit files and circumstances as measured against lenders' criteria.

Uk_observer

Deleted_User said:

Your low card limits, existing indebtedness and tightened lending criteria are likely to be the reasons.

Your credit rating isn't a factor in lending, only your credit files and circumstances as measured against lenders' criteria.

Credit card limits are actually quite high, sorry, I meant we only have small amounts left to pay off. I was recently told to lower my credit limit as this could go against us as it’s effectively debt that we can get in to!?

[Deleted User]

Don't lower your limits. It will look as if lenders don't trust you.

Grumpy_chap

Uk_observer said:

I do have a bounce back loan, could this be the reason why it’s been rejected?

This may be a factor, two-fold:
Firstly, it is a level of debt that you have and is a liability to be repaid - at up to three months' (25% annual) turnover it could be sufficient to directly impact any affordability calculations the lender does.
Secondly, in order to apply for the BBLS, you had to make a statement that the business had been adversely impacted by coronavirus.  "Adversely impacted" is a binary statement and does not give a lender good indication as to by how much the business has been impacted, but would likely mean that the lender takes a more cautious view in assessing lending based upon based-years business accounts.

Are you a sole-trader or Ltd Co? 
What business sector do you trade in? 
Can you prepare a business plan that shows the future expectations to add to past records and possibly consider a broker?

Was it a personal or business lease you were seeking?

It is best to avoid applying for credit again immediately (as a household) until you understand the factors that impacted the decision, as you do not want a succession of failed applications as they may then make you less credit-worthy.  Sadly, understanding the factors of concern are not something the lender is likely to be much help in explaining - you need to do your own critical assessment of the financial position.

Uk_observer

Grumpy_chap said:

Uk_observer said:

I do have a bounce back loan, could this be the reason why it’s been rejected?

This may be a factor, two-fold:
Firstly, it is a level of debt that you have and is a liability to be repaid - at up to three months' (25% annual) turnover it could be sufficient to directly impact any affordability calculations the lender does.
Secondly, in order to apply for the BBLS, you had to make a statement that the business had been adversely impacted by coronavirus.  "Adversely impacted" is a binary statement and does not give a lender good indication as to by how much the business has been impacted, but would likely mean that the lender takes a more cautious view in assessing lending based upon based-years business accounts.

Are you a sole-trader or Ltd Co? 
What business sector do you trade in? 
Can you prepare a business plan that shows the future expectations to add to past records and possibly consider a broker?

Was it a personal or business lease you were seeking?

It is best to avoid applying for credit again immediately (as a household) until you understand the factors that impacted the decision, as you do not want a succession of failed applications as they may then make you less credit-worthy.  Sadly, understanding the factors of concern are not something the lender is likely to be much help in explaining - you need to do your own critical assessment of the financial position.

Thanks for the reply.
I am a sole trader and applied for a personal lease, from what I’ve read, the BBL wouldn’t show up on personal credit checks!

my wife meanwhile is PAYE in a stable job that she’s had for years with little to no debt, so I’m assuming they are taking into account my situation when looking at hers, if of course, they are using the BBL against me.

SeanG79

If you are a Sole Trader, the BBL is in your personal name as you are the business and the business is you. Having the BBL may mean that you fail affordability checks.

Your wife may fail for the same reason if you have any financial association, like a mortgage then banks are likely to see the overall debt between you. 

In addition to all of this, underwriters are looking more closely at self-employed individuals unless they have continued to trade largely unaffected during covid, having the BBL loan would indicate that your business has suffered.