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Original poster

Loans

15 replies

amiold · 09/10/2024 12:36

Is this just the way the world is at the moment or is it my circumstances?

I'm trying to borrow some money for a car. I've had my car for 8.5 year but it's three doors and become impractical with 1 year old (end of month he is 1 but getting heavy).

I want to borrow 16k over 5 years. The dealership rate is 11.8%. I'm not a fan of pcp but that worked out more. So I thought I'll borrow at 6.1%. Tesco refused. My bank are calling me tomorrow (although I know they will lend me 12k at 6.1%). I'm being offered by most lenders at 9.8%. Tesco refused as I've stated. I don't know why?

I earn £60,214.
My mortgage is £828.
House valued at £210k and I owe £106. (So 45-50% ltv give or take)
I over pay on my mortgage at around 10% per annum.
I have access to about £60k on credit cards.
My credit card debt is just short of £900 (will pay by end of year, back to work this month)
I have a 999 credit score
I have no other finance

Is it me? Am I a risk? Or is it just the way the country is at the moment

OP posts:
Dearg · 09/10/2024 12:43

Did Tesco ask what the loan was for and what type of car, age etc? Or is it an unspecified personal loan?

Rates can vary a lot on used cars as not all lenders value them the same. What does the car cost, and how much deposit are you putting in, what is the expected value at the end of the loan - all this affects the rate .

If it’s just an unspecified loan, can you ask Tesco why?

MulberryPeony · 09/10/2024 12:44

Have you gone through and eligibility calculator? It may not be you are such but certain lenders loan to certain groups so an eligibility calculator will match you up. For loans I recall Martin Lewis saying if you want say 15k, ask for 14.9k because there are steps. That step with Tesco might be 12k and it might be different to another lender.

Original poster
amiold · 09/10/2024 12:46

MulberryPeony · 09/10/2024 12:44

Have you gone through and eligibility calculator? It may not be you are such but certain lenders loan to certain groups so an eligibility calculator will match you up. For loans I recall Martin Lewis saying if you want say 15k, ask for 14.9k because there are steps. That step with Tesco might be 12k and it might be different to another lender.

This is interesting I'll have a look. Yeah eligibility calculators coming back at 9.8%. Same at 12k and 16k

OP posts:
Original poster
amiold · 09/10/2024 12:48

Dearg · 09/10/2024 12:43

Did Tesco ask what the loan was for and what type of car, age etc? Or is it an unspecified personal loan?

Rates can vary a lot on used cars as not all lenders value them the same. What does the car cost, and how much deposit are you putting in, what is the expected value at the end of the loan - all this affects the rate .

If it’s just an unspecified loan, can you ask Tesco why?

Yeah I suppose I could ask but I doubt they'll change their mind.

They didn't ask any questions just unspecified. I'd be happy to provide the info but it wasn't on the form.

OP posts:
Bjorkdidit · 09/10/2024 13:16

They've refused because they think you're bad at managing money, as evidenced by needing to borrow to buy a car despite having a good salary, low outgoings, credit card debt and presumably no savings.

I know you've overpaid your mortgage but you should only really do that once you've saved for expected large purchases. Plus it's usually more cost effective to save rather than overpay due to better interest rates on savings than what mortgages cost.

You might have better luck with your own bank. You could also see if any of your credit cards do a money transfer balance transfer offer and pay for a car that way.

StMarieforme · 09/10/2024 13:24

Because until you are back at work there's no guarantee that you will return to work.

Original poster
amiold · 09/10/2024 13:34

Bjorkdidit · 09/10/2024 13:16

They've refused because they think you're bad at managing money, as evidenced by needing to borrow to buy a car despite having a good salary, low outgoings, credit card debt and presumably no savings.

I know you've overpaid your mortgage but you should only really do that once you've saved for expected large purchases. Plus it's usually more cost effective to save rather than overpay due to better interest rates on savings than what mortgages cost.

You might have better luck with your own bank. You could also see if any of your credit cards do a money transfer balance transfer offer and pay for a car that way.

Hmm interesting take and this could be the reason with how it looks from the outside.

With regards to your comments about managing money I'd disagree. I've just done 13 month on maternity. Two foreign holidays. Hand full of uk breaks. I've rendered the house. New front door. The credit card debt is cash flow. I've money in the bank but I want to keep it to hand in case something comes along. I will pay that. I have a feeling you'll say I shouldn't have done all that before buying the car but I've made do with what I had at the expense of really enjoying this time with the baby I won't get back. I appreciate that they won't see this and they can only see what's on paper but Im just pointing out I'm not bad at managing money

OP posts:
Original poster
amiold · 09/10/2024 13:35

StMarieforme · 09/10/2024 13:24

Because until you are back at work there's no guarantee that you will return to work.

I will Hve a wage this month. Do they access HMRC records etc I'm not sure how this works. Maybe should try again next month x

OP posts:
arthar · 09/10/2024 13:37

I have access to about £60k on credit cards.
My credit card debt is just short of £900

This is likely to be a factor. You have access to a lot of debt. I would get rid of at least £50k of that.

Original poster
amiold · 09/10/2024 13:37

arthar · 09/10/2024 13:37

I have access to about £60k on credit cards.
My credit card debt is just short of £900

This is likely to be a factor. You have access to a lot of debt. I would get rid of at least £50k of that.

Do I do this by closing accounts ?

OP posts:
Original poster
amiold · 09/10/2024 13:52

arthar · 09/10/2024 13:37

I have access to about £60k on credit cards.
My credit card debt is just short of £900

This is likely to be a factor. You have access to a lot of debt. I would get rid of at least £50k of that.

Can you educate me on this please cos I have left them open thinking that it is better to have unutilised credit available but it seems I have dreamt this 🤦🏼‍♀️

OP posts:
jolenethea · 09/10/2024 14:48

I would say it's the unutilised credit card debt could be contributing, which could be perceived as a risk if you decided to use it all.

Credit score is irrelevant really - that's just an interpretation from the credit reference agency. Each lender will have their own internal credit scoring system, which will be based on their own risk appetite.

rainbowunicorn · 09/10/2024 14:53

amiold · 09/10/2024 13:52

Can you educate me on this please cos I have left them open thinking that it is better to have unutilised credit available but it seems I have dreamt this 🤦🏼‍♀️

Show quote history

The way the bank looks at it is that you could literally spend that £60000 on your credit cards tomorrow. They might lend you £12000 today and by tomorrow your total debt on loans and credit cards could be £72000 so more chance of defaulting on some of it. Close some of the accounts and reduce the available limits on others.

I don't think a pp was suggesting you are bad at managing money more that the impression the bank gets is that you are due to your current situation.

The 999 credit score is virtually meaningless as each bank loan company etc will have their own criteria.

You have presumably depleted the majority of your savings very quickly over a 1 year period to cover all the things you list. All the lender knows is that you don't have much in the bank, despite having a decent income. You already have some cc debt and are now looking for additional funds. They may think you have over stretched yourself. In the real world you are fine but on paper not so much.

arthar · 09/10/2024 15:11

Can you educate me on this please cos I have left them open thinking that it is better to have unutilised credit available but it seems I have dreamt this 🤦🏼‍♀️

Sure, £60k is too much.

Original poster
amiold · 09/10/2024 15:30

@arthar @rainbowunicorn @Dearg @MulberryPeony @Bjorkdidit @StMarieforme @jolenethea thanks everyone. I'll have a look at closing some accounts

OP posts:
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