Loan declined..looking for thoughts

johnc24

Hi Everyone

Just looking for some thoughts on this one.

I applied for a loan to the tune of €55,000 for career training.

I received a reply that it was declined for the following reasons -

1. No known association with the bank.

2. The amount is unsecured.

The latter concern being the principle one.

Everything else was in order and satisfactory including ability to repay and credit checks passed. They indicated all this was fine.

The main issue was the fact that it is unsecured and I have no known association with the bank. In essence the loan is being given on good faith.

I am struggling to come up with ideas on how I can improve my overall application. I do have the opportunity to appeal the loan which I will be doing.

Does anyone have any ideas on how I might approach this dilemma.

I do have a property against which I can secure it against the loan but they never came back with that idea.

Also to me if the unsecured amount is worrying the bank, the logical step to take would be to arrange the loan as a "staged loan" - Each module of my training that I complete I would be granted more funds, similar to building a property stage by stage and funds would be released accordingly.
This was rejected on the grounds it is a personal loan application and as such I would have to take the full amount immediately. ( To pay back higher interest) but they cannot "have your cake and eat it too". Either they want to minimize their risk or they don't....

Any input on this would be highly appreciated.

J

nlgbbbblth

If the property is your PDH / family home then they will not want to take this as security for a personal loan. Too messy; subject to the Code of Conduct for Mortgage Arrears if something goes wrong.

If it's an investment property then you might be ok.

Unsecured lending for €55,000 is too risky for the bank.

What about a personal guarantee from a third party who has a decent net worth?

dotsman

Have you tried your own bank?

Besides what nlgbbbblth asked;
What savings history do you have?
What credit history do you have?
How much of the money are you putting up yourself?
What repayment capacity do you have?

johnc24

nlgbbbblth wrote: »

Unsecured lending for €55,000 is too risky for the bank.

I understand that point of view for sure, why then can't they arrange for a staged loan. In that each module I complete I get access to fresh funding.

It cannot be that complicated to arrange. The first amount would be in the region of €12,000. This mitigates the risk for the bank because if problems are going to happen they will happen early on and the loss can be minimized.

johnc24

dotsman wrote: »

Have you tried your own bank?

Besides what nlgbbbblth asked;
What savings history do you have?
What credit history do you have?
How much of the money are you putting up yourself?
What repayment capacity do you have?

My own bank offer only 5 years. The bank I am currently dealing with offer 10 years and is therefore more suitable for me.

Our savings are regular and currently sit at €3,00 having started July last.

Our Credit history is perfect not one missed payment or discrepancy anywhere.

Repayment capacity has been proved to the bank. They agree with it.

Potatoeman

johnc24 wrote: »

I understand that point of view for sure, why then can't they arrange for a staged loan. In that each module I complete I get access to fresh funding.

It cannot be that complicated to arrange. The first amount would be in the region of €12,000. This mitigates the risk for the bank because if problems are going to happen they will happen early on and the loss can be minimized.

The risk of someone leaving the country without paying is probaby higher at the moment.

stpaddy99

join noddle free and check your credit scoring report. check youve closed various accounts with no overdrafts around anywhere or unpaid bills etc

Stheno

stpaddy99 wrote: »

join noddle free and check your credit scoring report. check youve closed various accounts with no overdrafts around anywhere or unpaid bills etc

Is that not just based in the UK? Nothing to do with Irish credit reports which are held by the ICB?

GerardKeating

stpaddy99 wrote: »

join noddle free and check your credit scoring report. check youve closed various accounts with no overdrafts around anywhere or unpaid bills etc

Noodle is UK only, and is also geo-locked to UK IP address.

amdublin

Could you mortgage the property and get a loan that way?

johnc24

amdublin wrote: »

Could you mortgage the property and get a loan that way?

Can you expand on that a little?

I have a property that I have a mortgage on.

I was considering getting it valued, however this would only be provided as "peace of mind" for the bank at which I applied for the loan because the loan amount is UNSECURED.

The bank I have the mortgage with tend to release money for "home improvements" and little else! - I asked once before and told them what it was for and they said no.

Surely releasing money from my property is mine to spend on whatever I so wish.

phormium

55k is a very large unsecured loan, banks would indeed be very slow if not totally adverse to lending an amount that large without security.

If you already have a mortgage on your property then they could only get a second charge and would rank behind your mortgage holder in terms of security, I thought from your original post you had a mortgage free property and were offering that to the bank, I was wondering why they did not take that as security but it is clearer now.

Banks can make up whatever business policy they like so if they will only top up a mortgage for home improvements then that is their policy decision, the term 'releasing money from property' is a very celtic tiger term, it always sounds better than what it is, simply borrowing more money.

Scortho

You also have the issue of the bank looking down the line to when repayments start at being very wary. Is there any equity in you home? You might be able to basically increase your mortgage amount to the level of funding you need, if there is equity in the house

amdublin

johnc24 wrote: »

Can you expand on that a little?

I have a property that I have a mortgage on.

I was considering getting it valued, however this would only be provided as "peace of mind" for the bank at which I applied for the loan because the loan amount is UNSECURED.

The bank I have the mortgage with tend to release money for "home improvements" and little else! - I asked once before and told them what it was for and they said no.

Surely releasing money from my property is mine to spend on whatever I so wish.

That won't work so. When you said you were offering it against the loan I assumed it was not mortgaged.

If it is mortgaged already then a bank will not loan against it. If you don't pay the loan they can't claim the house as it's mortgaged to another bank.

amdublin

Any family member(s) who will lend you the money?

Are you guaranteed a (very good) job at the end of the training?

smurfjed

I applied for a loan to the tune of €55,000 for career training

Thats a lot of money for career training, what are you training for? a pilot ?

johnc24

amdublin wrote: »

Any family member(s) who will lend you the money?

Are you guaranteed a (very good) job at the end of the training?

No family member would be able to lend me the money.

To answer the subsequent poster it is for Pilot training and while I would not be guaranteed a job, my application to the flight deck would be looked at in a more favorable light due to my current position already in the airline.

johnc24

smurfjed wrote: »

Thats a lot of money for career training, what are you training for? a pilot ?

Yes.

racingman

Hi all,
I have a similar problem to Johnc24. I applied for a personal loan of just 7k ( to help with my wedding this year )and was refused on the grounds that the loan would bring my payments to 54%. I am a customer of the bank for over 20 years and have always had a top class record with them. I have never before been turned down for a loan. What doesn't make sense to me is that last year was the final 7 months of a 5 year 40k loan and I wanted to borrow to buy a car that was 10k. I wanted to borrow the 10k by consolidating it with the remaining 4k loan and put this over 5 years again. The bank wouldn't do this because they said they couldn't consolidate a personal and motor loan , fair enough. Now for the good bit that shows ( boggles my mind) how these people in Dublin make up figures and make decisions, about people that they have never met or had any banking relationship with. They gave me the loan of 10k for the car on a motor loan costing 62 euro a week and knowing I was still paying 204 euro a week on the 40k loan. That's a total of 266 euro weekly for 7 months and never missed a payment. Nothing has changed since then so I didn't expect to be refused for a loan of 7k costing just 34 euro weekly that would bring my repayments to under 100 euro a week ( the 40k loan is cleared). How can they argue with both these figures and the good record I've always had ? I assumed that the manager could loan this amount without having to go through head office, but it seems not. My partner and I have 6 accounts with this bank including a mortgage account and none of the accounts have ever missed payments or given trouble. It is a sad future when 20 years of a good working relationship means nothing to a bank. I am seriously considering closing and moving all my business elsewhere. Any advice will be very much appreciated from a very let down customer.
Thank you in advance.

phormium

Twenty year relationships mean nothing in banking anymore. Your local manager can probably not approve anything anymore if it does not fit the criteria which yours didn't due to the high percentage of net monthly income going on loan repayments.

Your last car loan was probably approved on the basis that the repayments on the loan with 7 months left were ignored. Some banks do not count in repayments with less than 6 months to run, maybe you scraped in with the 7 months.

Your previous 40k loan was approved back in the good old days and criteria has certainly changed since then.

Finally a wedding may not score very highly on the list of 'loan purpose' in their criteria.

Open a credit union account and be prepared for when you want to borrow again, might have a better chance there

racingman

thanks for that that phormium.