Car Finance Rejection

bubby08

Hello, a query, I have recently applied for car finance with Santander, I was declined despite having two settled previous agreements with them and not having missed a payment, I have no adverse credit, aside from car finance only one credit a account a credit card and according to MSE Credit club have a loan rating of v.good and over 70% in the credit hit rate. I understand they can approve and decline who they want, but the decline was by a manual underwriter.  The search was undertaken on Experian which has a lower score than on Equifax but as everyone says I am trying not to put too much stock into what the scores are. My only concern is I have paid a deposit and now the dealership want to propose me to another dealership but I believe they use Experian also so it would be logical to conclude that this will be declined.  This is all very strange and now it’s like I have wasted a hard search and any more will only kill my credit rating further. I previously saw a mortgage advisor regarding preparing to re-mortage and he said it should be straight forward so I have no idea where to go from here or which information I should trust.

BestbRrgards 

CliveOfIndia

Would it be possible to try a different lender?  How much is the loan in relation to your income - it could be down to affordability.

One hard search is not the end of the world, but don't go making too many applications otherwise it can start to become an issue.  Try some eligibility checks with other lenders.

I know this probably doesn't help much now, but if you're ever in a similar situation again, don't pay a deposit until you've secured the finance (that's not intended to be condescending, it's intended purely as helpful advice for the future).

bubby08

Yes I could the dealership are proposing a different lender, but my concern is if it was declined by a lender for who. I have had two agreements in 5 years and not missed a payment whatever now makes me undesirable for them would be the same for the other lenders. However as I have stated there is nothing adverse and either credit report and as discussed on another thread my loan eligibility on the MSE credit club is v.good.

the reason behind the deposit was I didn’t want to do a credit search for a vehicle that may be sold Before approval. But you are absolutely right in hindsight probably not the best idea.

CliveOfIndia

bubby08 said:

Yes I could the dealership are proposing a different lender, but my concern is if it was declined by a lender for who. I have had two agreements in 5 years and not missed a payment whatever now makes me undesirable for them would be the same for the other lenders.

It may simply be affordability.  If your previous 2 loans were for £6000 each, that may have been fine in relation to your income.  If you're now looking for £25,000 of credit on the same income, that's obviously a substantially different level of risk for the lender.

If it is affordability then yes, most lenders will probably have broadly similar parameters.  But try a few eligibility checks with different lenders - these will only result in a soft search so won't impact your credit history.

bubby08

Yes maybe it was down to affordability however the feedback the dealership got was it was something on my credit file. I don’t know how accurate that is though. 

bubby08

Reading online I have read most lenders in terms of car finance won’t like a monthly commitment of over 15% of your monthly income of that is true then in my case it was just over that. 

CliveOfIndia

bubby08 said:

Reading online I have read most lenders in terms of car finance won’t like a monthly commitment of over 15% of your monthly income of that is true then in my case it was just over that. 

I will admit I don't know what the figure is, but that does sound like a reasonable, broad-brush, limit, and could very well be the reason.  Of course, any responsible lender will look at the monthly repayments in conjunction with your other commitments (mortgage/rent, and I assume they must make an estimate for an average spend on food, energy, council tax, other essentials.  Along with other "known" debts like loans or credit cards which they can see from your credit report).

But yes, that does sound like a reasonable assumption - and there's nothing "wrong" with your credit history as such, it's purely affordability.  Time to look at cheaper cars methinks

Realistically, for most people, I guess 15% of monthly income is actually quite a lot to be spending on a car after you've accounted for other essential outgoings, so it's perhaps not unreasonable to cite that as a maximum.

martinbainbridge1975

if it is the same lender you currently use, have you asked them for a reason. some will provide an explanation

the 15% of your monthly income is not necessarily correct, each lender will have their own affordability criteria I would expect

born_again

bubby08 said:

Hello, a query, I have recently applied for car finance with Santander, I was declined despite having two settled previous agreements with them and not having missed a payment, I have no adverse credit, aside from car finance only one credit a account a credit card and according to MSE Credit club have a loan rating of v.good and over 70% in the credit hit rate. I understand they can approve and decline who they want, but the decline was by a manual underwriter.  The search was undertaken on Experian which has a lower score than on Equifax but as everyone says I am trying not to put too much stock into what the scores are. My only concern is I have paid a deposit and now the dealership want to propose me to another dealership but I believe they use Experian also so it would be logical to conclude that this will be declined.  This is all very strange and now it’s like I have wasted a hard search and any more will only kill my credit rating further. I previously saw a mortgage advisor regarding preparing to re-mortage and he said it should be straight forward so I have no idea where to go from here or which information I should trust.

BestbRrgards 

Just what do you mean by No Adverse credit, aside from car finance. As that reads to me like you have defaulted on car finance somewhere.

Your score means nothing to a lender. They never see the made up number.
They will look at your credit history & your income to available debt ratio.

Just be aware other finance co's may have a much higher interest rate.