Had car loan withdrawn, think I'll struggle to get finance

[DillonL]

I was recently in the process of buying a car. Took out a loan of £25k through Tesco, planned to pay £10k of my own money (£35k purchase price).

When it was time to pick the car up, it became clear that it had been in an accident so the purchase fell through. I paid back the Tesco loan instantly (within the 14 day cooling off period).

I then realised Halifax do car loans with a pretty low APR. I got an instant quote through my online banking and was approved for the full amount at about 3%, valid until October.

It's taken a couple of months to find another car of the same spec, but I've finally found one so logged into my online banking to check the loan was still available. Unfortunately, there was a message to say that they could no longer offer me credit. Called up the bank and the lady said it's probably due to the fact I have the Tesco search on my credit report, and there is no way they can now offer me credit.

I think I'm going to get the same issue applying for a loan anywhere now, I've tried one of the "compare the market" sites and it looks like my only options are going to be someone like Amigo (49.9% APR, no thanks!)

I'm 27 years old, living rent free and earning over £60k a year. Outgoings are minimal (Currently able to save over £2500 a month), and I have about £60k in savings. Is there anywhere I can apply for a loan with a supporting letter to the underwriters to explain my situation? I think if a human looked at the situation they'd be able to see that I am credit worthy, but the automatic decision making processes are seeing the Tesco loan and rejecting me instantly. I could pay for the car outright, but don't want to take my money out of my S&S ISA when money is available at close to 3%.

[Lemming Train]

Unless you'd decided not to buy a new car afterwards then it makes no sense whatsoever for you to pay off the loan straight away. You're still going to need the money when you find another car so you should have kept the money in your account until you needed it. You'd still be paying the same amount back in instalments every month which you'd presumably already budgeted for.

It's possible that the loan isn't showing as settled yet with some CRAs but it could just simply be that the computer algorithm considers you to be a high risk because of 2 separate applications for £25k loans within a short time span and doesn't 'see' that the original loan has already been settled.

It's likely that Halifax was not aware of the Tesco application approval when they ran the initial credit check but have since become aware of it hence withdrawing their offer.

There isn't much you can do. You could contact Tesco but I think all that will happen is they'll put it through as a new application and that will also get declined because of the £25k application you made to Halifax.

[Davey Blueeyes]

If you have £65k in savings, why not just buy the thing? You will probably pay a higher loan rate of interest than what you are earning on £35k of that money, depending where it is of course.

[Far Cough]

Ring Tesco and speak to them. Explain the situation and see if they can clear your record.

[anonymous-user]

Davey Blueeyes said:

If you have £65k in savings, why not just buy the thing? You will probably pay a higher loan rate of interest than what you are earning on £35k of that money, depending where it is of course.

+1 seems idiotic to borrow money at a higher rate than the bank will offer you on your savings.

[anonymous-user]

Davey Blueeyes said:

If you have £65k in savings, why not just buy the thing? You will probably pay a higher loan rate of interest than what you are earning on £35k of that money, depending where it is of course.

+1

Any other way is pure nonsense, unless you can get the 25 you need on a credit card (interest free)

[NickCQ]

Just wait ten months and use your accumulated savings to buy it with no loan

[xeny]

wormus said:

+1 seems idiotic to borrow money at a higher rate than the bank will offer you on your savings.

-1, the OP says it's in S+S ISA, so on average higher returns than the loan would cost, and you'd lose the ISA allowances.

I'm in the wait 10 months and buy it outright camp, but then I'm not 27, and have seen living situations change and £60K jobs disappear surprisingly quickly.

[sidicks]

xeny said:

-1, the OP says it's in S+S ISA, so on average higher returns than the loan would cost, and you'd lose the ISA allowances.

I'm in the wait 10 months and buy it outright camp, but then I'm not 27, and have seen living situations change and £60K jobs disappear surprisingly quickly.

Well a cash ISA wouldn't be higher interest than the cost of the loan and an equity ISA might have expected higher long-term returns, but you certainly couldn't guarantee that over a relatively short term (3-years), so it's not really a relevant comparison.

The loss of the ISA allowance might be more of an issue.

[mike74]

How can someone be switched on enough to earn £60k a year, yet gormless and feckless enough to not realise what a pointless and stupid idea this is and not capable of figuring out for themselves the simple and obvious alternative options outlined in the replies?

[xeny]

Different age, different priority, different mindset, and if you're 27, you've quite possibly never seen the economy/job market having a bad year or two.

It's also not that hard (obviously I've no perspective on the OP's circumstances)at the moment to get £60K, especially in the South East if you're prepared to commute in to London and have a sought after skill set.

[Condi]

xeny said:

It's also not that hard (obviously I've no perspective on the OP's circumstances)at the moment to get £60K, especially in the South East if you're prepared to commute in to London and have a sought after skill set.

So..... its not that hard to earn more than 90% of people IF you live in a small corner of the UK, AND are prepared to commute AND have a desirable skill set.


fk me, the rest of us must have failed....


In most people's worlds 60k would be a good salary, at 27 its a great salary for anyone.


OP - talk to Tesco, they might offer you another loan at the same rate. Or wait 10 months and buy it. Or use savings.

[xeny]

Condi said:

So..... its not that hard to earn more than 90% of people IF you live in a small corner of the UK, AND are prepared to commute AND have a desirable skill set.


fk me, the rest of us must have failed....

Not failed, more made other choices with where we live (a choice) if we're prepared to commute (a choice) if we've got the ability and commitment to work out what skills are in demand and develop them ( a mixture of choice and innate ability, depending on where you stand on nature vs nurture).

I wouldn't call not having to cram yourself onto a crappy commuter train failing, but this is wildly off-topic, we don't even know where the OP works.

[Condi]

xeny said:

Not failed, more made other choices with where we live (a choice) if we're prepared to commute (a choice) if we've got the ability and commitment to work out what skills are in demand and develop them ( a mixture of choice and innate ability, depending on where you stand on nature vs nurture).

I wouldn't call not having to cram yourself onto a crappy commuter train failing, but this is wildly off-topic, we don't even know where the OP works.

We are, but it was more a small rant at throw away comments which appear all too often, especially in this section of PH, and seem to assume that everyone earns big money and its easy to do so.

'Its not hard to make 60k a year' No, really? Honestly? Why not tell that to the 92% who dont...

Anyway, Im sure you're right and the roads are paved with gold, but in my experience even in London 60k would still be considered a decent and above average wage.

[James_B]

mike74 said:

How can someone be switched on enough to earn £60k a year, yet gormless and feckless enough to not realise what a pointless and stupid idea this is and not capable of figuring out for themselves the simple and obvious alternative options outlined in the replies?

We pay our I teens that much, and some struggle to make a cup of tea.

As others have said, in London it’s not that unusual.

[James_B]

Condi said:

We are, but it was more a small rant at throw away comments which appear all too often, especially in this section of PH, and seem to assume that everyone earns big money and its easy to do so.

'Its not hard to make 60k a year' No, really? Honestly? Why not tell that to the 92% who dont...

It’s pretty easy to do, yes. It’s mainly just down to choices. Choosing to stick in at school, choosing to do a worthwhile degree, then choosing to follow a career that pays well. Anyone of around average intelligence or better could choose to follow a path that leads to being on that much money in London, but very few do, as it’s Hard work, with the rewards coming a few years down the line from the initial efforts.

[Muzzer79]

Far Cough said:

Ring Tesco and speak to them. Explain the situation and see if they can clear your record.

This

It’ll be because the ‘old’ loan is still showing

Tesco will put it to their underwriters, who should approve you

However, as others have said, if you have £60k in the bank and are saving £2500 a month just buy the thing from that money and invest what your monthly payment would have been

[Driver101]

How come you are living rent free? If you're so comfortable with your finances shouldn't you be paying for your keep?

£60k a year will be £3500 per month before pension contributions. Earning £60k per year and living off <£700-800 per month sounds a bit boring.

[Simpo Two]

Not raiding the ISA is a fair point. Don't forget to add depreciation to your sums. What will this £35K car be worth in 3 years?

[DillonL]

Lemming Train said:

Unless you'd decided not to buy a new car afterwards then it makes no sense whatsoever for you to pay off the loan straight away. You're still going to need the money when you find another car so you should have kept the money in your account until you needed it. You'd still be paying the same amount back in instalments every month which you'd presumably already budgeted for.

I did consider this but the particular car/spec I want doesn’t come up very often. I was looking for 3 months before finding the right one.

Davey Blueeyes said:

If you have £65k in savings, why not just buy the thing? You will probably pay a higher loan rate of interest than what you are earning on £35k of that money, depending where it is of course.

wormus said:

+1 seems idiotic to borrow money at a higher rate than the bank will offer you on your savings.

BAM225 said:

+1

Any other way is pure nonsense, unless you can get the 25 you need on a credit card (interest free)

sidicks said:

Well a cash ISA wouldn't be higher interest than the cost of the loan and an equity ISA might have expected higher long-term returns, but you certainly couldn't guarantee that over a relatively short term (3-years), so it's not really a relevant comparison.

The loss of the ISA allowance might be more of an issue.

mike74 said:

How can someone be switched on enough to earn £60k a year, yet gormless and feckless enough to not realise what a pointless and stupid idea this is and not capable of figuring out for themselves the simple and obvious alternative options outlined in the replies?

My money is all inside my ISA. My long term investment strategy is to just direct debit a load every month into a world index fund and forget about it, not planning to withdraw for 20 years. Going on the assumption of a long term return of 6%, which I think seems fair. I don’t want to interfere with my strategy so would prefer not to use my own money.

xeny said:

Different age, different priority, different mindset, and if you're 27, you've quite possibly never seen the economy/job market having a bad year or two.

It's also not that hard (obviously I've no perspective on the OP's circumstances)at the moment to get £60K, especially in the South East if you're prepared to commute in to London and have a sought after skill set.

xeny said:

Not failed, more made other choices with where we live (a choice) if we're prepared to commute (a choice) if we've got the ability and commitment to work out what skills are in demand and develop them ( a mixture of choice and innate ability, depending on where you stand on nature vs nurture).

I wouldn't call not having to cram yourself onto a crappy commuter train failing, but this is wildly off-topic, we don't even know where the OP works.

Currently living in the North West. Made a sideways move to be close to family for a while, would probably be looking at between 80-90k if I ever wanted to live in London (I don’t, see your above comments on cramming yourself into train etc). My salary should grow at a decent rate assuming no large external economic shocks, and no personal setbacks (illness etc). Not worried about affordability at the moment.

Simpo Two said:

Not raiding the ISA is a fair point. Don't forget to add depreciation to your sums. What will this £35K car be worth in 3 years?

My questionable “Best Estimate” analysis says c£28k in 2 years time (Which is how long I plan to own for). Works out about £300 a month in depreciation.

Driver101 said:

How come you are living rent free? If you're so comfortable with your finances shouldn't you be paying for your keep?

£60k a year will be £3500 per month before pension contributions. Earning £60k per year and living off <£700-800 per month sounds a bit boring.

It's just short term. Moved to be close to family, I'll eventually get my own place, just mentioned living rent free to give some idea of my current income/expenditure from a lender's point of view.

Edited by DillonL on Saturday 25th August 23:29