Declined Small Loan for Car Insurance
Discussion
Hi guys,
Came across a weird one today and not sure what to do.
Long story short, bought my first flat in November with a modest mortgage. I have never had any issues with credit in the past, I've had loans, car finance etc with no issues. At the moment, the only money I owe is my mortgage and my HP agreement on my car - almost paid off.
To cut a long story short, I've been decorating and buying furniture over the last couple of months following my house purchase. As a result I've burn't through my savings getting the place sorted out and livable.
My car insurance renewal is due on the 22nd, so last week I began shopping around for quotes and finally yesterday found something reasonable at just over 1k (I'm 20, 3 points and a modified hot hatch!) however the company providing the quote wouldn't accept me on a pay monthly agreement. They wouldn't give a reason for this.
I went to my bank, who wouldn't let me fill out an application as I'm not 21. I then put my details into a comparison site to see what lenders had the best likelihood of accepting me, picked the top 2 and applied. Both of them declined, after giving a 'high chance of acceptance' beforehand.
One lender has indicated that my mortgage is most likely to blame. I'm now stuck as I don't really see what else I can do other than take a much more expensive insurance policy with a company who will allow me to pay monthly.
Last ditch effort is asking my parents for a loan. I'm keen to stand on my own two feet following the house purchase, so I don't want to go running back to them for money within a couple of months.
Any ideas on why I'm being declined? I don't have an overdraft or any credit cards.
Cheers guys,
Came across a weird one today and not sure what to do.
Long story short, bought my first flat in November with a modest mortgage. I have never had any issues with credit in the past, I've had loans, car finance etc with no issues. At the moment, the only money I owe is my mortgage and my HP agreement on my car - almost paid off.
To cut a long story short, I've been decorating and buying furniture over the last couple of months following my house purchase. As a result I've burn't through my savings getting the place sorted out and livable.
My car insurance renewal is due on the 22nd, so last week I began shopping around for quotes and finally yesterday found something reasonable at just over 1k (I'm 20, 3 points and a modified hot hatch!) however the company providing the quote wouldn't accept me on a pay monthly agreement. They wouldn't give a reason for this.
I went to my bank, who wouldn't let me fill out an application as I'm not 21. I then put my details into a comparison site to see what lenders had the best likelihood of accepting me, picked the top 2 and applied. Both of them declined, after giving a 'high chance of acceptance' beforehand.
One lender has indicated that my mortgage is most likely to blame. I'm now stuck as I don't really see what else I can do other than take a much more expensive insurance policy with a company who will allow me to pay monthly.
Last ditch effort is asking my parents for a loan. I'm keen to stand on my own two feet following the house purchase, so I don't want to go running back to them for money within a couple of months.
Any ideas on why I'm being declined? I don't have an overdraft or any credit cards.
Cheers guys,
Every place has their own criteria so it's difficult to know. Just be warned though repeated declined applications will make your credit file look even worse so I wouldn't make any more applications without some sort of guarantee of acceptance.
It can sometimes be a lack of credit history that can be against you. Do you have a credit card? Having a basic one and spending a bit on it each month then paying off in full at the end of the month can help your history.
Well done though for seeking your independence, so many choose to stay at home with their parents these days. It's a financial regret of mine in life not buying my own place sooner, moved out when I was 22 but rented for years. Don't envy you on the car insurance though, got mine renewed for around £250 on a ~280bhp BMW
Also don't rule out bank of Mum and Dad, ask if they'll lend you the money for you to pay back with interest, they'll get a better return on their money from you than they could in a savings account so everybody wins. I borrowed money for a car like that when I was around your age.
It can sometimes be a lack of credit history that can be against you. Do you have a credit card? Having a basic one and spending a bit on it each month then paying off in full at the end of the month can help your history.
Well done though for seeking your independence, so many choose to stay at home with their parents these days. It's a financial regret of mine in life not buying my own place sooner, moved out when I was 22 but rented for years. Don't envy you on the car insurance though, got mine renewed for around £250 on a ~280bhp BMW
Also don't rule out bank of Mum and Dad, ask if they'll lend you the money for you to pay back with interest, they'll get a better return on their money from you than they could in a savings account so everybody wins. I borrowed money for a car like that when I was around your age.
jamei303 said:
Moving recently wouldn't have helped as they like people who stay put. Are you definitely on the electoral roll in your new place?
I wouldn't be surprised if this was the reason. I am 40 odd, and when I moved a few years ago, had a devil of a time trying to get my credit sorted, despite a 999 rating and only my mortgage and few quid on a loan.
The local authority took months to get me on the roll.
If you haven't already get onto some free credit check websites: MSE's Credit Club and Clear Score are two that I use.
I suspect it is because you already have a lot of debt. So perhaps your income/debt ratio is not looking so good. You have a mortgage and a Hire purchase agreement and are now looking for a loan.
Having credit cards and overdrafts can actually increase your credit score, providing they're not maxed out and always paid on time of course. For example having a large amount of credit available to you, but using <50% can show responsible use of credit.
I suspect it is because you already have a lot of debt. So perhaps your income/debt ratio is not looking so good. You have a mortgage and a Hire purchase agreement and are now looking for a loan.
Having credit cards and overdrafts can actually increase your credit score, providing they're not maxed out and always paid on time of course. For example having a large amount of credit available to you, but using <50% can show responsible use of credit.
Sounds like you via your own dedication to not having any overdrafts or credit, have actually succeed in having no credit history as you are not paying anything back to bolster your credit ratings.
As mentioned get a credit card and dump it on it and go from there... maybe dump 100 on it a month and pay it off and start building the history.
As mentioned get a credit card and dump it on it and go from there... maybe dump 100 on it a month and pay it off and start building the history.
Taaaaang said:
I didn't even realise insurance companies ran full credit checks for monthly insurance.
Seems weird to me.
Does it even show as credit on a report?
My insurance is paid monthly (with no extra cost) and certainly doesn't show as a credit amount.
If this story is true, maybe try a broker?
It is credit. The premium is paid by a finance company (quite possibly an in-house finance company) and you pay it back in the form of monthly instalments. Seems weird to me.
Does it even show as credit on a report?
My insurance is paid monthly (with no extra cost) and certainly doesn't show as a credit amount.
If this story is true, maybe try a broker?
Cheers for all the replies.
I don't think I'm on the electoral roll at my new place yet. Some of you may have saw my thread in the homes section (which needs updated).
Long story short we had big problems with non working heating, door entry not working - couldn't receive mail - etc. Hence a lot of accounts are still registered to my parent's address. I'll get this updated asap.
I've had no issue with credit in the past. I've had 2 cars on HP agreements, loans for various bits and pieces (all paid off on time).
Naively I thought that I'd have been accepted based on my good credit at my previous address!
Bank of Dad was called on Friday to see if he could help me out, but he's in the middle of renovating his house and said he was short of cash at the minute. He did offer to take a loan out for me, but I felt too guilty letting him do this so I've lubed up for the 29% APR that my insurance co are hitting me with for paying in installments.
Slightly worrying that I'm struggling to get credit though, am I likely to be able to get a credit card in my current situation? Conscious of applying and being declined again after the recent applications.
I should add that I contacted my insurer and explained the situation over the weekend - they provided me with a pay monthly rate albeit at 29% APR, increased from their regular 16%.
I don't think I'm on the electoral roll at my new place yet. Some of you may have saw my thread in the homes section (which needs updated).
Long story short we had big problems with non working heating, door entry not working - couldn't receive mail - etc. Hence a lot of accounts are still registered to my parent's address. I'll get this updated asap.
I've had no issue with credit in the past. I've had 2 cars on HP agreements, loans for various bits and pieces (all paid off on time).
Naively I thought that I'd have been accepted based on my good credit at my previous address!
Bank of Dad was called on Friday to see if he could help me out, but he's in the middle of renovating his house and said he was short of cash at the minute. He did offer to take a loan out for me, but I felt too guilty letting him do this so I've lubed up for the 29% APR that my insurance co are hitting me with for paying in installments.
Slightly worrying that I'm struggling to get credit though, am I likely to be able to get a credit card in my current situation? Conscious of applying and being declined again after the recent applications.
I should add that I contacted my insurer and explained the situation over the weekend - they provided me with a pay monthly rate albeit at 29% APR, increased from their regular 16%.
Edited by Hammy98 on Tuesday 22 January 14:11
Hammy98 said:
I don't think I'm on the electoral roll at my new place yet.
Hence a lot of accounts are still registered to my parent's address.
^^These are huge issues for you................get on the electoral roll asap and get all your accounts updated and in a few months you'll be credit worthy again!Hence a lot of accounts are still registered to my parent's address.
As above, well done for moving out and being independent.
I think you have two options here:
1. Ask the insurance co if you can either overpay or pay off a lump early to clear the debt and if that would reduce the interest payable.
2. Accept your Dad's kind offer and pay him back as fast as you can so that he can clear the loan early.
I think you have two options here:
1. Ask the insurance co if you can either overpay or pay off a lump early to clear the debt and if that would reduce the interest payable.
2. Accept your Dad's kind offer and pay him back as fast as you can so that he can clear the loan early.
Bluesgirl said:
As above, well done for moving out and being independent.
I think you have two options here:
1. Ask the insurance co if you can either overpay or pay off a lump early to clear the debt and if that would reduce the interest payable.
2. Accept your Dad's kind offer and pay him back as fast as you can so that he can clear the loan early.
Cheers! I've spoken with the insurance co this morning, they've told me there is an early repayment facility and the interest should only be payable for the months which I have paid in installments. I've updated my address on the electoral roll as suggested, so I'll avoid applying for any more credit until my new address shows up on Experian. I think you have two options here:
1. Ask the insurance co if you can either overpay or pay off a lump early to clear the debt and if that would reduce the interest payable.
2. Accept your Dad's kind offer and pay him back as fast as you can so that he can clear the loan early.
Do we reckon I'm likely to be declined a credit card at the moment? I'd assume so but if not I may as well use one to start building up credit history at my new address.
Hammy98 said:
Do we reckon I'm likely to be declined a credit card at the moment? I'd assume so but if not I may as well use one to start building up credit history at my new address.
Get onto MSE's Credit Club and/or ClearScore. Both free. You will be able to see which credit cards you're most likely to be accepted for.
If you are planning to use it for regular spending and paying off in full every month (which you absolutely should), then the rate doesn't matter so much.
If you're eligible for a cashback Amex, they're very good cards to use for everyday spending. Providing they're paid in full every month! That's the golden rule.
Wacky Racer said:
Get a credit card , buy your petrol/food etc with it and MAKE SURE you pay it off in full every month.
It won't cost you a penny and will help your credit score usually.
I put all my details through Clearscore. They gave me a 90% chance of being accepted for a Virgin card, I clicked through to Virgin's website and used their eligibility checker which told me I WILL be accepted. It won't cost you a penny and will help your credit score usually.
I called Virgin, explained I've bought a flat and haven't yet moved in as I've been sorting things out with the developer, they said that until my name is on the electoral roll for my new address I should use my parents address as it is my 'current' one. She said that when I start staying there permanently and change my address with my bank etc, then I should contact them and update my address.
I've applied for the card following this, and noted down the time and duration of the conversation should it come back to bite me. It was posted all over the Virgin website that I'd get a decision in minutes... boom, 'We'll let you know in 10 days.' Oh f
k.That'll be another strike on my credit file then.
Hey man! I am also twenty years old and had a similar problem when trying to get a loan for my first car. The difference between you and me was that I didn't have any credit background and that's why they kept declining me. I almost gave up and was on my way to my parents' house to ask for money. It was against my convictions as I had promised to never rely on their financial help again. I was desperate, not having a car is like not having legs nowadays. On my way I came across https://www.moneyexpert.com/car-insurance/ and decided to give it one last shot. Thanks to them I am the owner of brand new VW Golf and my credit is already payed with minimal effort.
Edited by Ebalvrot on Wednesday 1st July 12:08
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