Rabo refused me a loan

stepbar

I applied for a loan with Rabo about two days ago. Was looking for 20k (However I only planned to draw down 4k repayable over 12 months - all I wanted was the nice interest rate). Now I know for a fact that any number of banks would give me 20k, however their interest rates are not so hot. Hell GE money would give me 35k unsecured.

Anyhow, I was refused in 35 minutes flat (Ok I applied the night before but I recieved an email at 9.35 with the bad news). No explanation, no nothing. So I rang them up, bit baffled. Got speaking to a nice enough chap, explained my predicament. Still no explanation (He rang an underwriter) and what’s even worse he / she were under no obligation to give an explanation. I mentioned all about AIB etc still no budge. So I asked him what could I actually borrow based on my wage. He didn’t know but he endeavored to find out. I still haven’t heard from him. :rolleyes:

So, seeing as the Rabodirect people loiter around these parts and are quick to promote all the great aspects of Rabodirect; Can you tell me what would you actually lend to a guy like me? I earn close to the average industrial wage (c 28k) and I have no other loans.
And also, why the all the secrecy?

Sonnenblumen

Sorry to hear about your loan refusal. There is at least one Rabo head on the boards: RaboDirect, who is keen to promote Rabo credentials etc. So may be opportune to demonstrate loan approval criteria, probably more interested in taking on irish savings/investments to fund dutch farming expansion. Anyways you should go to the Irish banks, they'd be better for the longer run and will offer you more than another foreign private bank. Nothing wrong with foreign and or private but methinks the two are a bad combo.

BendiBus

Sonnenblumen wrote:

Nothing wrong with foreign and or private but methinks the two are a bad combo.

Why?

stepbar

BendiBus wrote:

Why?

Well I think I am an example why. Anyhow I went back to them and applied for 10k. Approved. So all I have to do is send in all the documentation. But in fairness, if rabo wants to become a reckonable force in irish banking then they should start becoming more transparent. I dont see why they couldnt lend me 20k, I have 2k with them already (Chinese investment fund). But I dont want to take it out cause it is loosing money at the moment. In fairness I earn c28k, so is what is the problem? AIB will lend me what I need so....... I might just go with them.....

ixus

Stepbar, your earn 28K, so that's about 2K per month after tax. What would your repayments be on the 20K?

Over 61months = 400pm
Over 48 = 490pm

You say you have no other loans. A mortgage? Rent?
I'll guess you pay out at least 400pm on one of these and you wanted a 61 month loan.

That's 2K - 800pm = 1200pm or 300 per week to live on.
You take into account travel & living expenses and that brings it down further.

You have no current loans. Do you have any credit history so that the bank can do an ICB check? If not, there's non way you should be given a 20K loan. That's something like 92% of your annual income on a personal loan.

If Rabo is promising a quick turn around in loan applications, they have a fairly sophisticated Credit Scoring system that would take all these variable into account very quickly and churn out a yes/no or maybe. The maybe would go to an underwriter who would then evaluate the loan application. You might have been declined immediately by the computer system due to the amount and your income.

For me, the problem isn't that Rabo wouldn't give you a 20K loan on this criteria. It's that an Irish bank would. The words Credit Bubble spring to mind.

Note:
I'm only guessing these figures as a regular persons income & expenditure.

stepbar

ixus wrote:

Stepbar, your earn 28K, so that's about 2K per month after tax. What would your repayments be on the 20K?

Over 61months = 400pm
Over 48 = 490pm

You say you have no other loans. A mortgage? Rent?
I'll guess you pay out at least 400pm on one of these and you wanted a 61 month loan.

That's 2K - 800pm = 1200pm or 300 per week to live on.
You take into account travel & living expenses and that brings it down further.

<You are not far off, but TBH I stick another 300 away and happily live on the rest for the month. I dont have a car and I dont use transport but the odd the time.>

You have no current loans. Do you have any credit history so that the bank can do an ICB check? If not, there's non way you should be given a 20K loan. That's something like 92% of your annual income on a personal loan.

<Over 5 years, the repayments are c20% of my yearly salary, Not onorous TBH>

If Rabo is promising a quick turn around in loan applications, they have a fairly sophisticated Credit Scoring system that would take all these variable into account very quickly and churn out a yes/no or maybe. The maybe would go to an underwriter who would then evaluate the loan application. You might have been declined immediately by the computer system due to the amount and your income.

For me, the problem isn't that Rabo wouldn't give you a 20K loan on this criteria. It's that an Irish bank would. The words Credit Bubble spring to mind.

Note:
I'm only guessing these figures as a regular persons income & expenditure.

I have money else where in investments (which would easily cover the 20k) that I am not ready to cash in. Repayment capasity is not the issue here. However me thinks if I had invested a few more quid with rabo they would have no problem giving me what I needed. The fact that they would not even question what other savings / investments I had, is disappointing. I realise that the loan is given unsecured but it's relivant. If worst came to worst I can cash in my investments, not a problem. Credit bubble has got nothing to do with it.

So maybe someone from Rabodirect could explain their credit policy to me because I sure as hell cant fathom it.

ixus

stepbar wrote:

The fact that they would not even question what other savings / investments I had, is disappointing. I realise that the loan is given unsecured but it's relivant.

Fair point. It should be looked at but maybe it isn't because they are giving a quick turn around. It's either black or white. Be interesting to hear a Rabo response on it alright..

A Random Walk

stepbar wrote:

The fact that they would not even question what other savings / investments I had, is disappointing. I realise that the loan is given unsecured but it's relivant.

It's not relevant because you're not securing the loan against them. There's nothing stopping you selling your investments and buying a new car on the day you receive the loan. Savings may indicate some ability to save, but I agree with Ixus that I can't believe an Irish company will give you 1.5 times your gross salary unsecured (not saying you're making it up, I'm just shocked at the lax credit standards).

RaboDirect

As you will appreciate we cannot discuss the confidential details of a client application.

How a bank will make a decision re a credit application varies from bank to bank. For example, if you are deemed to be of a higher credit risk some banks will charge you a higher interest rate to reflect the higher perceived risk. At RaboDirect, the rates you see are what you get assuming that you have been approved.

How does the credit approval work?
Within the customer application form we have built in a credit score engine that determines if a customer could be granted approval for the amount he/she seeks. We take into account the applicant's income, rent or mortgage repayments, other commitments, eg, loans, credit cards etc. Other factors are taken into account such as length of time in current job etc. If you meet the requirements of the online application form your online application is sent securely to Friends First Finance.

Friends First Finance (the underwriters) will then complete an Irish Credit Bureau check on you. If you apply before 4pm on a working day you will receive an email from them within 1 hour informing if your application has been successful or not. Occassionlly some applicants forget or do not mention existing loan or credit card repayments that s/he might have. This will obviously have an impact on your application so you should always mention your existing debt commitments on your online application form.

After you send in your documents, ie, bank statement, payslips etc with your Credit Agreement these will be examined before a full & final approval is given. Usually there isn't a problem here but sometimes an applicant's paperwork doesn't always reflect their online application form.

Reasons for declines?
Your application may be declined if you simply seek too high a credit limit based on your existing income and outgoings. Your ICB check may also result in a declined application. There are other reasons alluded to above that may result in a decline.

If you are declined you can apply for a lower credit limit.

Banks don't tend to give detailed reasons why an application has been declined. One reason for this is that an applicant may try to manipulate the credit process to try and get an application through. However, you can always seek a copy of your credit record from the www.icb.ie. It costs €6 and you can apply online for it.

From the ICB:http://www.icb.ie/credit_rating.php
"How do lenders know about my previous loans?

Most lenders in Ireland send information about borrowers and their repayments to a central agency, the Irish Credit Bureau (ICB). The ICB holds information about borrowers and their loans for 5 years after the loan is closed. This information is held in an individual credit ‘report’ that is kept by the ICB about each borrower.

Your credit report includes: your name, date of birth, address(es) used by you in relation to financial transactions
the names of lenders and account numbers of loans you currently hold, or that were active within the last five years;
repayments made or missed for each month on each loan;
the failure to clear off any loan;
loans that were settled for less than you owed; and
legal actions your lender took against you

So, the ICB reflects a full picture of your credit history, good and/or bad".

Hopefully this long post (sorry about that) might help to clarify matters.

RaboDirect

RaboDirect

Sonnenblumen wrote:

Anyways you should go to the Irish banks, they'd be better for the longer run and will offer you more than another foreign private bank. Nothing wrong with foreign and or private but methinks the two are a bad combo.

Can't quite understand the logic of this!

Domestic banks have been making supernormal profits in the Irish market for years by charging high interest rates, offering miserly savings rates (look at any of demand deposit rates of the Irish banks who are still paying- 0.5 to 0.75%), high transaction charges etc etc. It's only when competition enters the market that they start to reduce their margins.

Rabobank is a cooperative bank so we're not quoted on stock exchanges (and not driven by the interests of institutional shareholders to wring every last cent of our the customer). The Group is over 100 years old, we've had operations in Ireland since 1994 and last Friday RaboDirect won the Investor Money Mate award for "Best Financial Service Online". We have over 30,000 customers and look after over €1b worth of savings for customers here so thankfully a lot of people don't seem to think that "foreign + private is a bad combo".

Sonnenblumen

RaboDirect wrote:

Can't quite understand the logic of this!

Domestic banks have been making supernormal profits in the Irish market for years by charging high interest rates, offering miserly savings rates (look at any of demand deposit rates of the Irish banks who are still paying- 0.5 to 0.75%), high transaction charges etc etc. It's only when competition enters the market that they start to reduce their margins.

Rabobank is a cooperative bank so we're not quoted on stock exchanges (and not driven by the interests of institutional shareholders to wring every last cent of our the customer). The Group is over 100 years old, we've had operations in Ireland since 1994 and last Friday RaboDirect won the Investor Money Mate award for "Best Financial Service Online". We have over 30,000 customers and look after over €1b worth of savings for customers here so thankfully a lot of people don't seem to think that "foreign + private is a bad combo".

I think you are a marketing person and pushing the envelope too far. Permit me to respond and hopefully pinpoint what is it precisely you fail to understand. Is it...
(a) Irish banks are amongst the best performers within the international banking sector, enviable profit margins, it makes me laugh to see one banker bemoan a more profitable performer
(b) life moves on the mutualisation status is practically dead and buried not just in Ireland but in most developed banking markets. Also for the odd lingering mutual dinosaur, the figures speak for themeselves, customers pay higher rates for loans, receive lower rates for deposits and have fewer product offerings to select. Of course there might be the odd exception, you know the one to catch a fly etc
(c) Investor Money Mate awards are offered willy nilly to practically anyone willing to turn and accept. Sorry no differentiation here.
(d) well done, i'd never realised you had 30,000 customers, which is what % market share and tell me, whats your target? and more telling when do you expect to achieve it??
(e)still you failed to answer my earlier Q, what does or has Rabo done to better Irish society or community life. For example all Irish based banks (including some foreign) are actively involved within the local community, sure it helps to build bridges, better association and perhaps also future customer prospects. Bottom line is important, but if all banks and indeed businesses were simply focused on bringing margin home to exploitative farmers well, the world would be a poorer place.

There's nothing specific against Rabo but rather the 'attitude' that making money is the be all and end all. I'm also in business and nothing like a 100 years but even I have learned the value of money extends beyond the balance sheet but giving back a little is also important. A point that would certainly be lost on some (but not all) elements of Dutch society.

I could go on, but I think I've made myself clear.

RaboDirect

This thread has now gone off the original thread about why an applicant was refused a RaboDirect Credit Account. However, we must respond to the posts below.

Sonnenblumen wrote:

(a) Irish banks are amongst the best performers within the international banking sector, enviable profit margins, it makes me laugh to see one banker bemoan a more profitable performer

You miss the point we're trying to make here. The Irish banking market has been one of the most profitable in Europe - this is quite true. There are a number of key reasons for this including a lack of real competition which has enabled banks here to make higher margins than other European countries. Clearly the Celtic Tiger has also been a major factor. But there are many structural reasons that have made the Irish banking market uncompetitive until the last few years. Indeed the Competition Authority has made a whole raft of recommendations to counter this. http://www.tca.ie/PromotingCompetition/MarketStudies/Banking/Banking.aspx
Like any sector in the economy, it's not until the market is opened up to competition that consumers get a better deal. Look at the car insurance market as an example or the pharmacist and legal professions that are crying out for competition.

(b) life moves on the mutualisation status is practically dead and buried not just in Ireland but in most developed banking markets. Also for the odd lingering mutual dinosaur, the figures speak for themeselves, customers pay higher rates for loans, receive lower rates for deposits and have fewer product offerings to select. Of course there might be the odd exception, you know the one to catch a fly etc

Yes, many building societies have demutualised and credit unions whilst still playing an important role in the economy don't always offer the best deals. There are still a number of very large banks that operate under cooperative principles in Europe, Rabobank being one of these. We are a AAA rated bank unlike the domestic Irish banks, made profits in 2006 of over €2 billion and operate in 35 countries. So there is still room for the cooperative model.

(c) Investor Money Mate awards are offered willy nilly to practically anyone willing to turn and accept. Sorry no differentiation here.

I agree that some awards can be quite dubious but the Money Mate Investor Magazine awards have an independent judging panel and is audited by Deloitte's. So unless you have specific inside knowledge into how companies are selected as winners your allegation about the merit of these particular awards is unfounded.

(d) well done, i'd never realised you had 30,000 customers, which is what % market share and tell me, whats your target? and more telling when do you expect to achieve it??
You can hardly expect us to divulge such commercially sensitive information.

(e)still you failed to answer my earlier Q, what does or has Rabo done to better Irish society or community life. For example all Irish based banks (including some foreign) are actively involved within the local community, sure it helps to build bridges, better association and perhaps also future customer prospects. Bottom line is important, but if all banks and indeed businesses were simply focused on bringing margin home to exploitative farmers well, the world would be a poorer place.

As a starting point we've made the savings market more competitive.

We will be announcing a specific Irish charitable sponsorship programme in the coming weeks. I wholeheartedly agree that companies should contribute to the communities that they work in. Rabobank is a genuine leader in Corporate Social Responsibility http://www.rabobank.com/content/about_us/corporate_social_responsibility/
One aspect of this is the Rabobank Foundation which does tremendous work in developing countries working with local communities.

There's nothing specific against Rabo but rather the 'attitude' that making money is the be all and end all. I'm also in business and nothing like a 100 years but even I have learned the value of money extends beyond the balance sheet but giving back a little is also important. A point that would certainly be lost on some (but not all) elements of Dutch society.

You seemed to have missed our main point - we are NOT all about the money precisely because customer advocacy is one of our founding principles as opposed to profit at any cost. Banks that are publicly quoted are driven to make as much profit as they can to meet their shareholders' requirements. The downside of this model is that the single minded focus to maximise profits it is often at the expense of customers and staff.

QUOTE]

This is our last post on the matter.

stepbar

RaboDirect wrote:

As you will appreciate we cannot discuss the confidential details of a client application.

How a bank will make a decision re a credit application varies from bank to bank. For example, if you are deemed to be of a higher credit risk some banks will charge you a higher interest rate to reflect the higher perceived risk. At RaboDirect, the rates you see are what you get assuming that you have been approved.

How does the credit approval work?
Within the customer application form we have built in a credit score engine that determines if a customer could be granted approval for the amount he/she seeks. We take into account the applicant's income, rent or mortgage repayments, other commitments, eg, loans, credit cards etc. Other factors are taken into account such as length of time in current job etc. If you meet the requirements of the online application form your online application is sent securely to Friends First Finance.

Friends First Finance (the underwriters) will then complete an Irish Credit Bureau check on you. If you apply before 4pm on a working day you will receive an email from them within 1 hour informing if your application has been successful or not. Occassionlly some applicants forget or do not mention existing loan or credit card repayments that s/he might have. This will obviously have an impact on your application so you should always mention your existing debt commitments on your online application form.

After you send in your documents, ie, bank statement, payslips etc with your Credit Agreement these will be examined before a full & final approval is given. Usually there isn't a problem here but sometimes an applicant's paperwork doesn't always reflect their online application form.

Reasons for declines?
Your application may be declined if you simply seek too high a credit limit based on your existing income and outgoings. Your ICB check may also result in a declined application. There are other reasons alluded to above that may result in a decline.

If you are declined you can apply for a lower credit limit.

Banks don't tend to give detailed reasons why an application has been declined. One reason for this is that an applicant may try to manipulate the credit process to try and get an application through. However, you can always seek a copy of your credit record from the www.icb.ie. It costs €6 and you can apply online for it.

From the ICB:http://www.icb.ie/credit_rating.php
"How do lenders know about my previous loans?

Most lenders in Ireland send information about borrowers and their repayments to a central agency, the Irish Credit Bureau (ICB). The ICB holds information about borrowers and their loans for 5 years after the loan is closed. This information is held in an individual credit ‘report’ that is kept by the ICB about each borrower.

Your credit report includes: your name, date of birth, address(es) used by you in relation to financial transactions
the names of lenders and account numbers of loans you currently hold, or that were active within the last five years;
repayments made or missed for each month on each loan;
the failure to clear off any loan;
loans that were settled for less than you owed; and
legal actions your lender took against you

So, the ICB reflects a full picture of your credit history, good and/or bad".

Hopefully this long post (sorry about that) might help to clarify matters.

RaboDirect

Well that's where AIB is leaps and bounds ahead of Rabo. unlike Rabo they "trust" their customers. In fact I hadnt to provide ANYTHING to AIB apart from a fax stating that I wanted a loan, I earn X and planned to repay Y per year. No questions asked. All I was looking for was 4 grand, granted I applied for 10k with Rabo, all I was ever going to draw down was 4k. I signed the CCA form on Tuesday and I had my money today. No problem or hassle and no snooty underwriters. I doubt AIB even done an ICB check because as I've said they trust their customers. If Rabo / Friends First had to have took one look at my a/c, they would have seen 2k sitting in an investment a/c. Anyway your loss Rabo .

In fact as well, Rabo would have you believe that they have the best loan rates on offer. AIB charged me 8.46% because I'm such a high risk customer BTW Rabo charge 9.5% for amounts below 5k and wont even look at amounts below 2.5k. Talk about cherry picking :rolleyes:

BuffyBot

I doubt AIB even done an ICB check because as I've said they trust their customers.

I would highly doubt that. They've either pre-scored you and had you pre-approved, or scored you as part of the lending process.

Very few banks that are still in business "trust" their customers all that much.

Idleater

stepbar wrote:

Well that's where AIB is leaps and bounds ahead of Rabo. unlike Rabo they "trust" their customers.

No they don't. For proof, stop paying back your loan just to see if they still "trust" you. You will find that they trust you as far as they can throw you.

stepbar wrote:

In fact I hadnt to provide ANYTHING to AIB apart from a fax stating that I wanted a loan, I earn X and planned to repay Y per year. No questions asked.

True, but wait, there is something that you have changed, what could that be...

stepbar wrote:

All I was looking for was 4 grand, granted I applied for 10k with Rabo, all I was ever going to draw down was 4k. I signed the CCA form on Tuesday and I had my money today. No problem or hassle and no snooty underwriters.

Ah Hah! you asked AIB for 4 grand and they said no problem...

Why don't you ask AIB for €20000 and see if they don't ask you any questions? Post back their response, purely so other Potential Rabo Loan applicants can decide for themselves if Rabo are "lying" or if it is you who is being a little "economical" with the truth.

stepbar wrote:

If Rabo / Friends First had to have took one look at my a/c, they would have seen 2k sitting in an investment a/c. Anyway your loss Rabo .

They looked all right, so what could the problem have been, maybe some thing is different...

Oh yeah, you asked Rabo for €20000, and expected them to give you that on a no questions asked basis. they refused, and you asked them for €10k, which they approved, but no, not happy with that you went to AIB and asked for €4k and they gave it to you no questions asked and you say that they "trust" you :rolleyes:

stepbar wrote:

In fact as well, Rabo would have you believe that they have the best loan rates on offer. AIB charged me 8.46% because I'm such a high risk customer BTW Rabo charge 9.5% for amounts below 5k and wont even look at amounts below 2.5k. Talk about cherry picking :rolleyes:

Wow, what you have just demonstrated is that shopping around might get you a better deal than taking the first thing offered to you.

Here is a good example for you, If someone had say a €10k lumpsum to put somewhere (short term) and wanted a "decent" interest rate, where do you think one could go?

AIB? no.
BOI? no.
Rabo? Yes...

Cherry Picking? no. Shopping around? yes.

L.

stepbar

nereid wrote:

.

Here is a good example for you, If someone had say a €10k lumpsum to put somewhere (short term) and wanted a "decent" interest rate, where do you think one could go?

AIB? no. <Actually AIB can give 6.6%>
BOI? no. <BOI, 6.5%>
Rabo? Yes... <and Rabo, 5% up to 10k>

<So who would you pick?> And before you start 6.6% is 6.6% at the end of the day, regardless how they structure it

L.

Hold on a minute sonny. I got it on good authority (from the person I was talking to) that I would have had no problem getting 10k or 20k. I have a personal relationship with my local bank and all my family bank there as well. So yes there is an element of trust there. Unlike Rabo they havent a clue who I am, as long they are making a few quid out of me they couldnt give a sh1t. Banks are not in the business of doing over customers, in fairness it would cost more to take me to court if I stopped repaying my loan.


I applied for 4k because that was all I needed. However to get the rate I wanted from Rabo, I had to apply for 10k, even though I had never any intention of drawing down 10k. If you had to have read the original msg, you would have seen that. I'm sorry I didn't just go to AIB first cause it would have saved a lot of hassle and it turned out that they offered the same rate all along.

BendiBus

I can't believe people are getting so emotional about banking.

Just go where the best deal is for each transaction.

Loyalty to a bank is foolish. None of them have any loyalty to you.

ballooba

Also, I don't think you would see AIB on here responding to your questions like that. Fair play RaboBank.

Idleater

stepbar wrote:

Hold on a minute sonny. I got it on good authority (from the person I was talking to) that I would have had no problem getting 10k or 20k. I have a personal relationship with my local bank and all my family bank there as well. So yes there is an element of trust there.

Well, I earn a little more, and have more in saving than you specified in your original post, and I approached AIB for a motor loan (€5000) and they asked questions. I also was speaking to my own branch manager where I have been banking for 25+ years and was still asked the questions.
So, no, your trust is misplaced and you are not comparing like with like.

You asked rabo for €20k, and got €10,

you asked AIB for €4k and got €4k.

end of story.



and as for the "rates" that you put in BOLD in your quote above, those rates are not for lump sum investments, they are for monthly contribution rates.

The €10k rabo limit also is exactly the €10k lump sum that I have to put away.

READ the post yourself.

L.

Linford

stepbar wrote:

Hold on a minute sonny. I got it on good authority (from the person I was talking to) that I would have had no problem getting 10k or 20k. I have a personal relationship with my local bank and all my family bank there as well. So yes there is an element of trust there. Unlike Rabo they havent a clue who I am, as long they are making a few quid out of me they couldnt give a sh1t. Banks are not in the business of doing over customers, in fairness it would cost more to take me to court if I stopped repaying my loan.


I applied for 4k because that was all I needed. However to get the rate I wanted from Rabo, I had to apply for 10k, even though I had never any intention of drawing down 10k. If you had to have read the original msg, you would have seen that. I'm sorry I didn't just go to AIB first cause it would have saved a lot of hassle and it turned out that they offered the same rate all along.

You applied for €4k from AIB, who I assume you have been banking with for a number of years, and they also advised you that you could borrow more. You also mention that it is your family's branch.

The reason that the person who you were speaking to in AIB said that you would probably offer you the €10k/€20k is for two reasons, 1. they know you and your personal circumstances and 2. they know your family and would have seen your family as an unofficial guarantor.

I think it is reassuring that a bank is not lending €20k to someone they know little about, someone who may have little or no credit history and earns €28k per year.

Blinder

Stepbar wrote:

AIB? no. <Actually AIB can give 6.6%>
BOI? no. <BOI, 6.5%>
Rabo? Yes... <and Rabo, 5% up to 10k>.

The rates you have quoted above for AIB and BOI are regular saver accounts, where as the Rabo rate is a on demand account.
Completely different. It is like comparing apples with oranges.

Where was the AIB and BOI regular saver accounts before rabo direct came on the market?
A on demand savings account in BOI earns about 0.15%
Compare that with the Rabo rate that you have quote above.


Banks do not operate on trust! They have guidelines to follow.

There is a hell of a difference between 4K and 20K, esp on a salary of only 28K
I'm not surprised that you weren't approved.

wiggzie

sounds like the OP has strong ties to AIB - any undeclared interests? or maybe he's just a shareholder and wants to maximise his gains and was happy to be fleeced as a customer if he got a extra 1 cent dividend...