Any info on why I would be unlikely to be accepted for loan?

Conor19

Hi all, I was looking to take out a loan with Tesco in order to purchase a car.
Im employed full time, my take home pay after tax is about £2300, and my total monthly outgoings for bills and mortgage payment is about £700 and I have a good credit score.
I checked my eligibility with Tesco for a £10,000 loan over 5 years and it came back saying I’m unlikely to be accepted.
Any info as to why that might be ?

MorningcoffeeIV

You're not meeting their risk criteria.  Could be affordability, ER, employment, payment history, existing debts, available credit, financial associations, amount requested, loan purpose and so on.

Check your credit files as a starting point to see what's on there (not the pretend credit scores).

retiredbanker1

£2300 - £700 = £1600 - what is that used for - is saved?

CliveOfIndia

It could be any number of things - the one thing that won't have any bearing is your credit score.

The first step is, as suggested by a previous poster, to check all three of your credit reports to make sure there's no negative markers on there.  Ignore the score, also ignore their assessment of your credit-worthiness.  Just verify that all the data are factually correct.

Assuming there's nothing amiss on your credit reports, it'll simply be the fact that you don't meet Tesco's lending criteria.  Since all lenders have different criteria and different target customer bases, you won't know exactly what criteria you've failed on - it's worth doing some eligibility checks with other lenders.

One thing that may be worth considering is the value of the car you're buying, and the length of the loan.  I'm assuming it's a second-hand car for that price, and 5 years is quite a long time for a car loan - if you can do it over 3 years instead, that might be a more prudent option.  It's entirely possible (though hopefully it won't happen!) that the car may suffer a terminal fault in those 5 years.  If that were to happen, you've still got to repay the initial loan, plus take out another loan on top to buy another car.

As I say, that's a worst-case scenario, but it's certainly something you should think about.

prettyandfluffy

Try an eligibility checker which won't leave a credit check on your file.  MSE has one, there are others.  What about trying your existing bank? They should have an oversight of your financial history which might be beneficial to you and banks usually have the option via their app or website to check if you would be approved, before you submit a formal appli.

fatbelly

Could be a blessing in disguise. On your figures you could save that sum in 6 months and buy with cash.

MEM62

@Conor19 Do you really want to borrow £10K and pay interest on it to buy an asset with a value that falls like a stone?  You can't help the fact that a car depreciates in value but if you save for it you at least minimise your losses.  

Nasqueron

MEM62 said:

@Conor19 Do you really want to borrow £10K and pay interest on it to buy an asset with a value that falls like a stone?  You can't help the fact that a car depreciates in value but if you save for it you at least minimise your losses.  

Does anyone buy a car with the intent of selling it for a profit? You buy something, you use it, it is worth less than it was before, that is how things work, very few things appreciate in value after purchase (and particularly with use). Someone buying a car intending to use it for years for what it's intended for has got the value that they "lost" by the depreciation fake cost. The only people who are really genuinely affected by it are people who buy with the intent of selling or using the car as a deposit for the next like on PCP, your average person should never care about this nonsense 

Baron_Dale

Nasqueron said:

MEM62 said:

@Conor19 Do you really want to borrow £10K and pay interest on it to buy an asset with a value that falls like a stone?  You can't help the fact that a car depreciates in value but if you save for it you at least minimise your losses.  

Does anyone buy a car with the intent of selling it for a profit? You buy something, you use it, it is worth less than it was before, that is how things work, very few things appreciate in value after purchase (and particularly with use). Someone buying a car intending to use it for years for what it's intended for has got the value that they "lost" by the depreciation fake cost. The only people who are really genuinely affected by it are people who buy with the intent of selling or using the car as a deposit for the next like on PCP, your average person should never care about this nonsense 

Regarding your last sentence about PCP, that is probably about 90 per cent of people who buy cars! 

Of course cars are a depreciating asset, but why lose more by paying interest as well? Fortunately I see my car as a means of transport and not a status symbol. I buy my cars for cash and never brand new. Current car is 2016 model and cost £13000 in 2018 now currently worth just over £7000, so not doing too badly.

MEM62

Nasqueron said:

MEM62 said:

@Conor19 Do you really want to borrow £10K and pay interest on it to buy an asset with a value that falls like a stone?  You can't help the fact that a car depreciates in value but if you save for it you at least minimise your losses.  

You buy something, you use it, it is worth less than it was before, that is how things work, very few things appreciate in value after purchase (and particularly with use). 

Agreed but the downward spiral can be particularly steep with cars.  

Nasqueron said:

MEM62 said:

@Conor19 Do you really want to borrow £10K and pay interest on it to buy an asset with a value that falls like a stone?  You can't help the fact that a car depreciates in value but if you save for it you at least minimise your losses.  

Someone buying a car intending to use it for years for what it's intended for has got the value that they "lost" by the depreciation fake cost. 

It is true that there is value in the usage.  No argument there. However, that is no reason not to reduce the financial hit by buying a car cash.  It still reduces the overall cost of owning the vehicle and therefore is an actual financial  benefit. 

Nasqueron said:

MEM62 said:

@Conor19 Do you really want to borrow £10K and pay interest on it to buy an asset with a value that falls like a stone?  You can't help the fact that a car depreciates in value but if you save for it you at least minimise your losses.  

your average person should never care about this nonsense 

I think that they very much should.  It reduces to cost of their motoring.  
  

Nasqueron

MEM62 said:

Nasqueron said:

MEM62 said:

@Conor19 Do you really want to borrow £10K and pay interest on it to buy an asset with a value that falls like a stone?  You can't help the fact that a car depreciates in value but if you save for it you at least minimise your losses.  

You buy something, you use it, it is worth less than it was before, that is how things work, very few things appreciate in value after purchase (and particularly with use). 

Agreed but the downward spiral can be particularly steep with cars.  

Nasqueron said:

MEM62 said:

@Conor19 Do you really want to borrow £10K and pay interest on it to buy an asset with a value that falls like a stone?  You can't help the fact that a car depreciates in value but if you save for it you at least minimise your losses.  

Someone buying a car intending to use it for years for what it's intended for has got the value that they "lost" by the depreciation fake cost. 

It is true that there is value in the usage.  No argument there. However, that is no reason not to reduce the financial hit by buying a car cash.  It still reduces the overall cost of owning the vehicle and therefore is an actual financial  benefit. 

Nasqueron said:

MEM62 said:

@Conor19 Do you really want to borrow £10K and pay interest on it to buy an asset with a value that falls like a stone?  You can't help the fact that a car depreciates in value but if you save for it you at least minimise your losses.  

your average person should never care about this nonsense 

I think that they very much should.  It reduces to cost of their motoring.  
  

There is no "cost" to depreciation lol, I got a new car in 2014 and I am still waiting for the invoice to pay for the "cost", my car is still on the road, maybe on the 10th anniversary I will get a cost bill? Where is the cost? I bought a bottle of whisky and drank most of it, I can't sell that for the same price as I paid for it because it's been drunk lol. The "loss" of "value" is equal to the gain I got from enjoying the whisky

Your point on interest is the same as I already said - you get a loan, you pay interest on it, you buy a car, it loses value as you use it. Unless you buy a car with the intention of selling it and trying to get money, you're not affected by depreciation and should ignore it