Turned down for Car Finance???

Celtp

Hi all

Hope someone can help shed some light here. I applied for PCP car finance recently and was turned down. I don't have any other loans except my mortgage. I did have Xmas spend on my credit card but that was cleared last month. I have enough disposible income and my credit rating is perfect.

The only issue that I can think of is I used my overdraft during the last three months last year. I was on sick leave from work and there was a delay with benefits. I did explain this with the application. I guess it didn't help that the bank statements where for the most expensive months of the year, lots of Christmas shopping!

I need to change my car and really want to do PCP finance but am nervous to apply to a different garage. I've never been turned down for anything before.

Anyone know what the lending criteria is? Would using an agreed overdraft be the cause of the rejection?

Thanks

Cee-Jay-Cee

I'd imagine your right, over draft and regular credit card use don't help credit ratings. Have you missed many credit card repayments? A few of those also add black marks

lau1247

are you with the bank that you applied to?? that helps a lot too apparently.

Last time I applied to BOI because they have the cheapest rate, they refused it because I didn't do banking with them (i.e. no record with BOI).. My earning was well in excess of what the monthly payment is and I had a clean record from AIB.. yet no dice unfortunately..

That could be one of the factor potentially

Celtp

I have never missed a credit card payment, in fact my card was cleared in January. CR showed only up to 31st Dec, which had all my Xmas spending on it. Again within limit.

The finance is with a car manufacturer who have their own bank. I really need to change my car but don't want to risk applying elsewhere until I understand why I was declined.

Wondering if I should try wait until beginning May so overdraft & credit cards won't have been used for 3 months?

I have written to finance company to see if they will explain why I was declined. Waiting until May will be tricky, I need a car for work and can't drive the one I have at present.

Thanks for your replies

skibum

you can do a credit check on your self with these guys:
http://www.icb.ie/
Think it costs €6, banks and other lenders use them for credit checks.

Celtp

Hi I did do a credit check as I was worried that there might have been a mistake. It came back perfect, just showed CC limit & spend plus mortgage. No missed payments on either.

dbrunson

HI , i used to sell car finance, shop around and also why not approach your own bank/ credit union for a loan, if your rating is that good you should be sound, its a case of the banks picking their customers, they will also look at your employer/job and use that to decide yes or no, also shop around,

if you were refused by say vw then no point is going to another volkswagen/seat/audi/skoda dealership as they all uses the same bank,

toyota use boi, but like i said, shop around and pcp while it looks attractive ie the ads for a new bmw for 300 or so a month, dont forget big deposit and big balloon....

Nickindublin

OP I would go to another another manufacturer if I was you. Could be any reason why they turned you down. I got turned down for a loan to help my mum with home repairs when they couldn't give away enough money. I had more savings in the bank than I was borrowing and I only had a small car loan at the time. I was with the bank all my life and they turned me down and gave some stupid reason. I walked around the corner to another bank and got the approved in 5 minutes. They were gobsmacked i was turned down by my own bank.

Skybox

Hi OP

I changed the car in November. Got turned down by one company for a loan. Had a look in another garage and got approval there. It really is a case of the banks picking and choosing their customers. Like you, my overdraft was fairly high for a couple of months beforehand and one bank used that as an excuse while the other was happy enough to go with it!

Stinicker

CJC999 wrote: »

I'd imagine your right, over draft and regular credit card use don't help credit ratings. Have you missed many credit card repayments? A few of those also add black marks

I can understand if you were borrowing with the Credit Card but I have my Credit Card setup with a 100% Direct Debit to meet the balance each month, my biggest bill was €8,000 and I still met it. By using my Credit Card for practically everything am I unwittingly damaging my Credit rating? I have never missed a payment and it is paid off each month.

Stinicker

Stinicker wrote: »

.......... By using my Credit Card for practically everything am I unwittingly damaging my Credit rating?............

Nope, the overdraft theory is spoof too.

bazz26

OP, did you apply for finance directly from the bank/finance company or through a garage? Alot of banks/finance companies will only lend if you are buying from a main franchised dealer. Or how old is the car in question as they will not finance the car if is generally over 3 years old either.

Miscreant

Celtp wrote: »

Hi all

Hope someone can help shed some light here. I applied for PCP car finance recently and was turned down. I don't have any other loans except my mortgage. I did have Xmas spend on my credit card but that was cleared last month. I have enough disposible income and my credit rating is perfect.
The only issue that I can think of is I used my overdraft during the last three months last year. I was on sick leave from work and there was a delay with benefits. I did explain this with the application. I guess it didn't help that the bank statements where for the most expensive months of the year, lots of Christmas shopping!
I need to change my car and really want to do PCP finance but am nervous to apply to a different garage. I've never been turned down for anything before.
Anyone know what the lending criteria is? Would using an agreed overdraft be the cause of the rejection?
Thanks

I was under the impression that you are supposed to be given a reason for being declined credit these days so you can steps to rectify the situation (such as a mistake on the ICB). Did you ask at the time you were rejected for a reason as to why?
Simply having a credit card would not be a reason for the rejection but depending on the limits of your overdraft and the credit card together with your mortgage, the finance company may deem your overall exposure to be too great. Even though you have nothing on the credit card is still classed as a "loan" up to the amount of your limit, same with your overdraft even when not used.

knifey_spoonie

Sometimes if an institution knows too much about you its a bad thing, i have seen many times where a person is refused with their own bank, yet is approved by another finance house.

Also if they have access to your account, and have seen you have had to use your overdraft you will not get finance for a while, they will want to see an regular amount being saved each month for a while.

bazz26

Yes, the fact that the OP has an overdraft facility could well be a factor.

Celtp

Thanks for all the replies. I normally buy used cars with savings and keep for 6-7 years. The depreciation really bothers me. Much happier to "rent" a service which is effectively what this is and change car every 3 years.

I did ask the dealer what the reason and was told he didn't know. I would have to contact finance division directly. So I wrote to them today.

I do have a second choice car which has PCP finance available but the rates are not as good. The car spec is much lower also.

I won't do anything until I hear back from the car finance company. Hopefully it will be a quick response.

fasttalkerchat

Celtp wrote: »

Thanks for all the replies. I normally buy used cars with savings and keep for 6-7 years. The depreciation really bothers me. Much happier to "rent" a service which is effectively what this is and change car every 3 years.

I did ask the dealer what the reason and was told he didn't know. I would have to contact finance division directly. So I wrote to them today.

I do have a second choice car which has PCP finance available but the rates are not as good. The car spec is much lower also.

I won't do anything until I hear back from the car finance company. Hopefully it will be a quick response.

That's the thing with finance deals, you have to be very flexible on what car you want. If I was you I would apply again in a month.

SJT1

Celtp.

Did VW Bank come back with a decline straight away, without asking for any additional info? If so, its to do with your credit rating and you would want to check that out, as already mentioned www.icb.ie €6 and you'll have it within 3 days.

If you've missed 1 mortgage payment over the last 5 years it will be game over for you as far as VW Bank are concerned, there will be no talking your way around it.

Your overdraft shouldn't be an issue, after all, that's what overdrafts are for. If VW Bank asked for bank statements and your balance was always in the overdraft and you had referral charges or unpaid standing orders etc and they saw that it will be game over again for you!

On the other hand, if they didn't ask for bank statements, and your ICB is perfect, send them into the bank to review, also if you have any savings, give them the statement to prove that also.

Also, are you in full-time permanent employment, have you been there for 6 months or more, if the answer is no to any of these then that another reason for them to say no.

And finally, are you 25+ years of age, cause if you're not and this is your first car loan, they will shoot you down here if you don't get a parent to go on with you.

Hope this helps

A-Trak

SJT1 wrote: »

If so, its to do with your credit rating and you would want to check that out, as already mentioned www.icb.ie €6 and you'll have it within 3 days.
.....

No offence, but did you read a single post in the thread, including the initial one??

SJT1

Yes A-Trak, I did. They got turned down for finance with VW Bank, I've just listed a number of reasons why that could of happened, whats the problem?