Trying for a loan, what do they want from me?!

I am not actually sure where this should go, either general or serious.
It seems kinda serious to me I guess, I just wanted some other peoples
ideas as to what could be happening in this instance.

Basically I am looking to buy a new car, I would like a £15000 loan.
Simple, I thought?
I am totally anal about something bad going on my credit report, or against my name for anything, anywhere.
So I was surprised when I was knocked back by a certain supermarket chain bank for the loan.
I did ask why it failed and they said it could be "all kinds of reasons."
Thanks for clearing that up nicely!

This worried me a bit because everything I told them was correct and afaik would have been fine.
So I checked my credit report again, fearing SOMETHING had gone wrong with it, that something was marked against my name.
Nothing. Absolutely nothing. Top score, yadda yadda yadda. All in order.
No red/black marks, never have been any red/black marks.

So why the f*** can't I get a damn loan?
I don't have the biggest salary ever, but I know my outgoings each month I can afford the loan.
I didn't do this online either, I did it by phone.

Anyone else have experience with this? I've only tried the one place so far. But i'm hesitant to try somewhere else incase of ruining my credit score. :/
I have checked my score and the check I would have thought they would have made on my file doesn't show, does it take a while to update? I only rang them today.

Does anyone else have experience of this? Being knocked even with a perfect credit score etc. ?
I know the lenders have their own little criterias but I can't see what I wouldn't meet?

Or am I being a total moron and should just dig a ditch?
"#firstworldproblems" and all that.

Hope that stuff makes sense, i'm not at all articulate in my writing.
/qqwhineqq

 

£15,000?

That's a significant loan, which is going to attract a higher level of scrutiny and ultimately, the bank/lender's judgement as to whether you can afford it based off your salary. If they simply went on your word that you can afford the repayments then they'd be offering loans to anybody who phoned up and said "Oh yeah I can definitely afford it"... which isn't how it works. They'll have a limit on what they'll be willing to lend you based on your salary - obviously mortgages change those rules as they're over longer periods of time.

Of course, without you divulging your salary it's a bit hard to say for certainty that this is the reason, but it's the one I'd be betting on given your other statements. If your credit score is high enough to meet their requirements (ie: not a bad debtor), then the only remaining issue is their assessment of your ability to pay the amounts required.

In regards to your credit score, although you have no negative marks, I'm assuming you have gained a positive rating by hold credit cards and having a previous repaid loan history? Their decline for credit should be entered on to your file by the end of the day.

 

Most probably salary then. Do about £15,000 p/a before tax.

Have 2 credit cards and had payment plan(s) for smaller things like phone contracts and the like.
All get paid off and stuff.

edit; Although, saying that he asked for the last two monthly pays gross. Which was £1500 the last couple of months, which would make it nearer £18,000 p/a gross.
So I assume he'd have based it off that? :/ Even though it is usually more around the £1000 mark p/m. Hmm.

 

^This^
If you have no history of previous credit a lot of companies will just decline you, with such a large amount i am guessing they would want to see that you have paid back similar loans/debts (5K, 10K) in the past.

 

They'll never lend you nearly 100% of your yearly salary with a history of having two credit cards (with limits sub £4k I'm guessing?) and basically non-existent loans such as phone contracts. To build up serious credit-worthiness you need to be taking out bigger loans (multi-thousands) over fixed periods (such as 3 years) and successfully paying them back. The next time you go for a loan they'll be willing to give you more than last time.

Case in point. My first loans were around £2000 at the age of 18/19 to pay for an expensive Mac or two. I paid them off in the 3 years asked, never missing a payment. Next time I went to the back they were happy to give me £3600 for career development purposes, whilst I was on a salary of £22,000. At the same time I was also given a credit card with £2,800 as the opening limit.

Now, last August, I'm in the situation where my credit limit has gone up to £5,000 without any applications to do so on my part, and they were happy to loan £9,600 towards a car based off a household income of £32,000.

So, obviously, the amount asked for is a third of the income and hence is "affordable" according to the bank. Secondly, there's a proven track record of paying off reasonably significant sums over time.

A £15,000 loan is equating to repayments of circa £500 a month over three years. That's 1/3-1/2 of your income before tax, which is an amount no bank is going to give you without some excellent evidence of past repayment of such sums.

 

As I was writing that I realised how silly it is that I basically
want my yearly pay straight out. Mad. It just didn't click. :/
It would have been around £277 p/m over 5 years. Is what I
asked for.
Is very annoying though. All this is because I've managed to
pay for most smaller things outright like first car, pcs etc.
Can't even touch the savings because that is for a deposit on
a house damnit!

Thanks for the help clearing it up a bit Cei and corky. Confirming I am a numpty. Haha.

 

Dude, on £18000,-- pa income I would not be buying a £15000,-- car! When I earned that sort of income (way back as I started out in my career) I bought a car for £3000,-- repayable over 3 years. And that felt like a major financial commitment.

My current salary (which is kind of a matter of public record, being an NHS employee --if you know my job, you can basically just look it up on the Agenda for Change pay scale, so I don't mind mentioning it here) is just past the £50000,-- pa mark. I am just about to pay £265,-- a month for a car, over 3.5 years --via a PCP scheme on 3.8% interest (in contrast to your 10.8%) which means I could hand the car back tomorrow if I changed my mind and walk away debt free. I fully intend to hand the car back at the end of that period --I'm not sentimental about a piece of metal that inevitably depreciates as it wears out in use.

On your income, I would never commit for 5 years to a £15000,-- car loan I could not back out off. Heck, I would not do it now. And then there's the depreciation (never buy a car that depreciates faster than you can pay off the loan) insurance, maintenance etc. Just don't do it.

 

I tend to agree with nexxo. No need to out yourself in so much debt especially with interest charges

 

Agreed with Nexxo. Rather than paying for the car up front like that (or rather, a fixed loan), have you looked at PCP plans...and a cheaper car?

Our new car was £14k and a bit of change. We fronted a £4k-odd deposit, bringing our finance total to £9.6k. We're paying £158 a month for four years, and at the end of that can either pay the remaining £3k of the finance deal and walk away with the car, or we can trade it in for a new shiny thing. Interest is about 4% off the top of my head.

 

Not to mention that in my day, £3000,-- bought me this:



A Vauxhall Nova 1.5 TDI in dark blue with 34000 miles on the clock, while nowadays roughly the same money gets you:



A Skoda Fabia vRS diesel hot-hatch with 79000 miles.

 

I just have to echo what everyone else has said - a years worth of salary on a car is crazy talk!

I read an article ages ago so I'm not sure if this is the one but unless you are earning a fairly reasonable salary, it makes the most sense to only spend 10% on a car. 20% is fair I'd say if you fancy treating yourself but 100% is bananas.

Please don't think I'm telling you how to spend your money, and I am the worst person in the world with money (hence why I've read these shitty articles) but when I saw the above I was a little suprised (and I'm not talking about that Nova)!

What car were you looking at out of interest?

 

Enough some people are a bit mean 10% of your salary is no fun. 25% - 30% is about the limits id ever want to spend on a car. 100% is crazy talk you would be worried sick about the repayments.

If the worst happened and you lost your job you would lose whatever the loan was secured on.

With the second hand market the way it is today for the best part of 3-5k you can get a decent motor. Friend of mine sold her Masda mx5 with less than 50k miles on the clock for under £3k. She was offered under £2k from a dealer. ( main issue with the mx5 is the insurance and tax on it + running costs)

repaying over 5 years for 15k seems a bit long term for what most financial places are offering these days. If its unsecured thats even more so.

 

How did you come up with 277 pounds per month ? 15000/5 years/12 months will give you 250 pounds per month, without interest, without fees, without anything ever paid to the bank other than the principal.

Interest rate is per year, and you are paying back the interest first. For example on my 100k€ loan on my appartment i am now paying back 5th payment from 360, and from 539€ monthly payment 404€ is interest, and only 135€ is the principal. And it started at 406/133 ratio .

And then of course you are probably asking for a loan with no collateral...

 

If I'm honest I'm kind of being pushed into it by the other half.
I am not that comfortable paying that sort of money, but I get talked
round too easily. Together our yearly salaries are around the £40,000
mark. But only having me on the loan because OH has bad credit (whole
other story about natwest).
Originally i was looking at getting a cheaper second hand car. Nearer
£3-5000 but got sick of feeling like dealers were showing me pieces
**** that would conk out in a years time.
So a newer car would hopefully solve that problem.
Buying a car is so so daunting for me, so I just worry the whole time. Haha.

The loan is an unsecured loan.

And Ljs, I am/was/whoknows looking at Peugeot 3008 Allure FAP150 2.0(exact model).
13/63 reg with 9000 miles.

and Faugusztin, that is what they quoted me on the phone, before declining the application.

Thanks for the help though everyone. Much appreciated. Sorry I didn't use quotes I
did this on my phone, pain in the ass! haha.
I know OH won't see it this way so this is gonna be a struggle I think.

 

Pete, if you're wanting a new car on Loan.. Why not go for one of those "pay for three years & give it back" style schemes? It's not much more than buying outright, but you only have to deal with it for three years.. Then you could choose to keep it, switch car or just drop out the scheme.
Just another option..

 

Sometimes they just don't give it. I asked for a graduate loan of 5k and even though I have a great credit score was refused. Got a call from the bank an hour later and they changed their mind

 

I don't get anything on credit, and that's why my car is rubbish

 

Also wanted to add my two pence. You need to stand your ground on this. Its likely most of the money you spend on that car you'll never see ever again. By the time you've finished paying off the loan, the car will only be worth £5k, if that, in all likelihood.

If you are only earning £18k, then a £15k car is far, far too expensive for you. Totally appreciate we all go a bit mad sometimes and buy something we probably shouldn't have, but Fifteen Thousand Pounds (!) is just too much money to make that kind of mistake on.

Go secondhand! Get something you can afford. Sure, by all means, spend £6k when you can only afford £5k, but at least you won't have hugely monthly repayments, it won't depreciate as fast, and if you decided to sell in 3 years time, you'd have probably only lost £2k instead of £10k.

 

Call me simple, but the answer to this is blindingly obvious. Your credit report suggests you probably can afford the loan and will repay it on time... they make more money out of people who can't afford loans than people who can!

Echoing this. Total waste of money

 

It's a far sight better than it was 10 years ago. As a bank teller earning £11,750 gross I was approved for a £11,000 car loan over 5 years, a £1,600 overdraft on my current account, a £2,400 Mint credit card and a £6,050 Egg card.

Guess who had lots of nice stuff 7-10 years ago. Guess who struggles to live on what left after servicing the debts that still remain after this drug-fuelled spending spree.

The financial crisis might have been a pain in the arse for a lot of people, but the tighter regulations on lending will save thousands of young people from making the same mistakes I did.

If only I'd been born four years later I'd have come out of university into a financial depression instead of being handed someone else's money on a gilded plate...