denied a loan

dm1979

hi all, just looking for info, and thought maybe a boardise could help me! (hope this is the right forum) we have just asked our bank for a car loan, our mortgage, current account and regular saver account is with this bank and the last time we approached them was to set up an overdraft, which wasnt that long ago. when we set up the overdraft we were told we have a great credit record and it was approved straight away. so the other day we rang about a car loan, they looked at our account with them, saying it all looked good until it came to a weekly fis payment, we were then told they couldnt give us a loan because it was there policy not to lend to social welfare recipients! i know a bank can lend to who ever they want, but can they refuse a loan based on the customer recieving a supplementry welfare payment?

dudara

Not a Consumer Issue - moved to Banking & Insurance & Pensions

dudara

phormium

Most banks don't include social welfare income as income for loan repayment calculations other than some long term payments like invalidity.

The thinking behind this policy usually comes from a few different places but the usual is that someone getting a payment like FIS is getting is because they are not earning enough to live on, social welfare payments are in general to help you stay above the breadline not to provide sufficient income to repay new borrowings.

The other big one is that if the whole things goes bad and bank/debtor end up in court, judge will take a dim view of a bank lending to someone who had insufficient income of their own and had to be part supported by state, judges attitude to bank might be they should have known better so making it harder for bank to recoup debt.

It is not uncommon and has been policy for many years.

dm1979

I do of course understand all of the above, but my point is that we were being told everything looked good for us receiving the loan, the person on the phone had already gone through all our commitments, mortgage etc put us on hold came back and asked what the payment was, we told them and was put on hold for a couple of minutes, when they came back to us they said it was there policy not to lend to welfare recipient's and the fact that we received this payment was the only reason why we weren't able to get the loan

Toots

The person on the phone who takes all the details is just a regular staff member, the underwriters approve the loan. That could well have been who they were talking to when you were put on hold.

Just because you're getting social welfare doesn't mean that there'll be a black mark on your account. Probably from looking at how your account was operating and going by the details you have them, it would have been a strong application. It's quite possible that when the operator spoke to the underwriters or someone similar and they saw the FIS payment they weren't able to proceed with the application.

Do you mind me asking what size of a loan were you looking for?

dm1979

We were looking for 8000, we have no other loans bar the mortgage