Car finance Question

[zedstar]

Anyone got any pointers for one of my clients,

She's 35, wage of £56,000 for the last 9 months, no mortgage (home owner outright), on the electrol roll and has an Experian score of 999.

She's trying to buy a new shape RR on PCP, car price £150k, deposit £75k. Got rejected from LR finance, and last month rejected from BMW finance also. Went to a specialist lender (oracle type) and they said the most they could do is a £30k loan.

Nobody seems to know whats scuppering it, she's not a British national though as she has a foreign passport but so has her husband, but he has a Porsche PCP so maybe thats not it?

I know it's a bit of an impossible question but is there anything she needs to go check?

thanks in advance

[Sheepshanks]

zedstar said:

Nobody seems to know whats scuppering it...

I would hazard a guess it could be related to her earning £56K for nine months, being a foreign national, not having a mortgage and wanting to finance a £150K car.

[Pica-Pica]

Could be anything from:
Money laundering worries.
Two non-U.K. passport holders with financed cars in the same household.
Inadequate history of earnings.
Plus, of course, impending recession concerns, and people defaulting.

[J1990]

£56k for 9months... But what about before that?
The need to look in to their history might also be a limiting factor if she hasn't been in the UK for a sufficient number of years (I think 5 years for the history check?)


If they can't find another way to finance then I guess a mortgage to release £75k of equity would be one option and then proceed with a cash RR purchase - Likely to be a lower APR than the PCP and she can also pay it off at the end of the fixed period rather than having to go the duration of the mortgage.

[Dan W.]

affordability

There will most likely be something else in the background you dont know about, Personal loans credit cars and such.

We often get this from customers, my score is sky high never had an issue.... earn 80k a year.

What then comes out is the 20k outstanding on credit cards and personal loans they have ongoing the lender has privy to see and make a judgement on

Edited by Dan W. on Monday 14th November 12:59

[blue_haddock]

Dan W. said:

affordability

There will most likely be something else in the background you dont know about, Personal loans credit cars and such.

We often get this from customers, my score is sky high never had an issue.... earn 80k a year.

What then comes out is the 20k outstanding on credit cards and personal loans they have ongoing the lender has privy to see and make a judgement on

Edited by Dan W. on Monday 14th November 12:59

I fully agree, with interest rates on the rise along with other household bills regardless of income they will be looking at other outgoings.

It doesnt matter if your earning 56k a year if your spending more equivalent to 80k a year and they think you will soon be struggling each month.

[zedstar]

all sounds logical - thanks!

[CG2020UK]

I’ve got nothing against PCP or leasing and have defended them on this site many times.

However this is bonkers.

She is trying to finance a car 1.5x her salary even after a deposit.

Edited by CG2020UK on Tuesday 15th November 15:13

[LightningBlue]

Possibly also a lack of credit history

[patch5674]

CG2020UK said:

I’ve got nothing against PCP or leasing and have defended them on this site many times.

However this is bonkers.

She is trying to finance a car 1.5x her salary even after a deposit.

Edited by CG2020UK on Tuesday 15th November 15:13

This!

I also have a car on finance, so nothing against finance, and doesn't particularly bother me if people "stretch" to get a nicer car, if their car is their hobby and enjoyment (as opposed to £150 a month golf club they chuck it on top of what would be considered a sensible car payment)

But by stretching I would think of having a car where the sticker price value of it is maybe 80% of your salary. (or the monthly cost is no more than 20% of your take home)

Forget a Range Rover, buying a 75 grand car when earning 55K is absolutely barmy and would breach all sort of risk parameters with a lender.

There is also a lot of red flags around traceability of the 75K cash deposit. It could have been a gift, but would need to be stated as having been a gift by the giver.

Also owning a house outright - 55K a year really isn't the sort of money that allows you to save a hefty deposit, let alone buy a house outright.

It could also have been a gift, but this brings me back to my first point which is earning 55K isn't enough to sensibly finance 75K in the sort of short periods of time that car finances are (5 years max).

[Bobupndown]

If she has £75k for a deposit youd imagine she could buy something not too shabby outright?

[J1990]

CG2020UK said:

I’ve got nothing against PCP or leasing and have defended them on this site many times.

However this is bonkers.

She is trying to finance a car 1.5x her salary even after a deposit.

Edited by CG2020UK on Tuesday 15th November 15:13

Whilst that's true, I just had a quick look at the finance offers on the new RR and a P440e with zero options is £127k with a GMFV of £82.5k. Assuming the extra 20k in options the OP's friend is adding all amount to zero residual value, that would still mean that the financed value is less than the GMFV, so affordability seems like a null point here.

I haven't seen anyone mention this but do JLR not operate a maximum deposit on PCPs? As odd as it seems, I've found before when buying from Ford, Hyundai and BMW that they normally have a maximum PCP deposit of ~30% of the car's value (I think for BMW it was 30% of base value + full value of any options). If that was the case then the deposit here would be irrelevant as it would be capped at ~45k and she'd then be trying to finance £105k on a £56k salary, which even after taking off the GMFV would be a hefty payment when interest is added on at the current rates.

[Sheepshanks]

J1990 said:

Whilst that's true, I just had a quick look at the finance offers on the new RR and a P440e with zero options is £127k with a GMFV of £82.5k. Assuming the extra 20k in options the OP's friend is adding all amount to zero residual value, that would still mean that the financed value is less than the GMFV, so affordability seems like a null point here.

I haven't seen anyone mention this but do JLR not operate a maximum deposit on PCPs? As odd as it seems, I've found before when buying from Ford, Hyundai and BMW that they normally have a maximum PCP deposit of ~30% of the car's value (I think for BMW it was 30% of base value + full value of any options). If that was the case then the deposit here would be irrelevant as it would be capped at ~45k and she'd then be trying to finance £105k on a £56k salary, which even after taking off the GMFV would be a hefty payment when interest is added on at the current rates.

JLR's own calculator seems to be max 40% deposit. Even so, she'd be more or less just paying interest on the GFV - although, as you say, the value of the options may mess things up.

Even without a mortgage people still have living expenses so perhaps whatever affordability calcs are done still think making a circa £1K/mth PCP payment from a something like £3K/mth take home pay is too much.

[coldel]

Bobupndown said:

If she has £75k for a deposit youd imagine she could buy something not too shabby outright?

I have to say I am reading this and thinking is she absolutely fking mental. What on earth are people doing throwing this sort of money at a car at that salary when they have £75k cash sat in the bank that could buy them something fantastic anyway. Sorry, but absolutely bonkers

[Sheepshanks]

coldel said:

I have to say I am reading this and thinking is she absolutely fking mental. What on earth are people doing throwing this sort of money at a car at that salary when they have £75k cash sat in the bank that could buy them something fantastic anyway. Sorry, but absolutely bonkers

I guess there's more to it than the OP posted, but obviously the finance companies think it's bonkers too, hence the difficulty.


The most bonkers part of it is that there's every chance the vast majority, if not all, of her deposit would disappear. So the car would cost more than she earns.

I wonder if she thinks, as I've heard is not unusual for PCP buyers, that she'll get her deposit back at the end?

[coldel]

Sheepshanks said:

coldel said:

I have to say I am reading this and thinking is she absolutely fking mental. What on earth are people doing throwing this sort of money at a car at that salary when they have £75k cash sat in the bank that could buy them something fantastic anyway. Sorry, but absolutely bonkers

I guess there's more to it than the OP posted, but obviously the finance companies think it's bonkers too, hence the difficulty.


The most bonkers part of it is that there's every chance the vast majority, if not all, of her deposit would disappear. So the car would cost more than she earns.

I wonder if she thinks, as I've heard is not unusual for PCP buyers, that she'll get her deposit back at the end?

Yes agreed on all the above. But just that someone is so willing to throw away a stack of her deposit and have a debt for the sake of that car, given she could actually outright own something and not lose anywhere near as much money on something that is still fantastic.

[CG2020UK]

Although I still think this is mental.

How about a lease deal?

On the new Range Rover SE D300 for 4 years.

£12,951 upfront and £1080 a month.

Cost just short of £65K for the 4 years so less than her deposit.

[Edible Roadkill]

Regardless of deposit the cars 3x her averagish income & it sounds like there’s little record of work or residential status.

[Sheepshanks]

CG2020UK said:

Although I still think this is mental.

How about a lease deal?

On the new Range Rover SE D300 for 4 years.

£12,951 upfront and £1080 a month.

Cost just short of £65K for the 4 years so less than her deposit.

Yeah, but - that's not the 150 grand one, is it?


And likely she'd still fail the credit check anyway.

[CG2020UK]

Sheepshanks said:

Yeah, but - that's not the 150 grand one, is it?


And likely she'd still fail the credit check anyway.

To be honest I haven’t a clue about Range Rovers, just not my cup of tea at all. Only one I recognise is the Evoque the rest are just Range Rovers lol.

Just offering the suggestion as another option.

Agree with your point btw regarding deposit size,