Has anyone else who's bought a new car had this? I was search 3 days before I picked up my car!! I didn't give permission for this to happen?! I obviously did for the initial search but not a 2nd one!!
Volkswagen Financial Services Credit Search
- Thread starter ollie2013uk
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Yeah, had similar, and no, they don't need your permission to do it.
First one was the actual credit check for finance, second one (before pick up) was to confirm identity and no change to address etc.
First one was the actual credit check for finance, second one (before pick up) was to confirm identity and no change to address etc.
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Most credit agreements give a generic authority for the lender to perform whatever measures they deem necessary e.g. On a mortgage application a search is performed at application stage but also commonly just prior to release of funds in case the applicants financial situation has changed e.g. Post application and mortgage approval they Take a new S3 on finance
paradigital
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Oh OK, thought it was a bit strange!! Does having a car on finance really have that much of an impact on your mortgage application?!
Yes...it affects affordability in that a sizeable chunk of your income is going towards repayments, and also remember you are borrowing the entire amount of the car. If it's something like an an S3, you are borrowing upwards of £40k....
Borrowing upwards of £40k is madness that must be a very large monthly payment indeed?
Sorry wasn't very clear. My point is that while a PCP reduces the monthly payment by offsetting the repayment of the GFV, it's still on your file of borrowing the whole amount, since you pay interest on the whole amount you borrow. Given discounts and modest specs and deposit, the full amount borrowed is probably around £30-35k actually.
Just been through this whilst trying to move house and remortgage for a higher amount. The banks kept declining us at the credit check stage, turns out the full amount of credit for my A4 was recorded in my credit score, including future payments and balloon payment.
As far as the banks are concerned they see PCP as just a standard, unsecured debt for the full amount outstanding on your finance. It'll therefore be taken into account on any of their affordability calculations.
We got it sorted in the end but had to jump through a few more hoops to explain it was PCP rather than hire purchase and we could therefore hand it back if needed.
Moral of the story, PCP (or any kind of finance) will affect your chances of having a mortgage application accepted.
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As far as the banks are concerned they see PCP as just a standard, unsecured debt for the full amount outstanding on your finance. It'll therefore be taken into account on any of their affordability calculations.
We got it sorted in the end but had to jump through a few more hoops to explain it was PCP rather than hire purchase and we could therefore hand it back if needed.
Moral of the story, PCP (or any kind of finance) will affect your chances of having a mortgage application accepted.
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Personally don't see it unless you're stretching yourself, even then use a broker who can sort these things for you!!
Im not sure this is a problem. The monthly payment is just that, it shouldnt be an issue with a mortgage unless you are unable to afford. If you are are unable to afford both, then of course you will be declined. Simples
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Not quite that "simples".
The lenders test is not whether you can afford the mortgage repayment as it is now with the car payment on top.
The lenders test, as required by the regulator, is whether you can still afford the mortgage should interest rates rise.
Given mortgage rates are at an all time low, and the debt is for perhaps 30 years , and that wage growth is depressed, this prudent policy makes sense and protects the borrower just as much as the lender.
That said, there is of course nothing to stop the borrower taking out the mortgage and then merily spending away after the house purchase completes.
I think the point I'm trying to make is that restricting your borrowing power on buying a home due to taking finance out on a brand new S3 isn't the wisest choice you can make.
You could very well afford the repayments of both the mortgage and the S3, but the lender might not let you borrow as much due to the fact you have such large finance owing on a car.
I would much sooner stretch myself by borrowing more against an appreciating asset, such as property, rather than have to settle for a cheaper property due to the fact I have a massively depreciating asset to finance along side. All about priorities IMO, but that's just me...
You could very well afford the repayments of both the mortgage and the S3, but the lender might not let you borrow as much due to the fact you have such large finance owing on a car.
I would much sooner stretch myself by borrowing more against an appreciating asset, such as property, rather than have to settle for a cheaper property due to the fact I have a massively depreciating asset to finance along side. All about priorities IMO, but that's just me...
I agree with you 100%. Just coming from it at a different angle!
Yep, and my post was just to point out that if you're thinking of buying a house in the next few years think carefully before getting a car on PCP. Your definition of what you can afford may differ to the banks!
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So if you can get a mortgage for 200k you'd max yourself out at 200k? Having a car on PCP shouldn't make a difference for affordability.
At current interest rates, and with the return on property in my neck of the woods, absolutely.
They might be willing to lend you £200k without the car finance, but much less with it.
Car will cost you far far more per month and will end up costing you thousands at the end of the agreement. Conversely, that extra you could borrow had you not had car finance would enable you to buy a better property and will very likely increase.
But yea, if they are willing to lend you what you need with or without the finance, then there is no issue. But it does affect your ability/amount you can borrow on a mortgage.
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The amount of monthly outgoings you have will have a significant affect on how much you can borrow on a mortgage. Lenders will want to know about any outstanding finance that has more than 6 months to run and will use that in the affordability figures they use. Lots of providers have fairly accurate affordability calculators online that will give you an idea of how much it impacts. Here's a link to one -
http://www.nationwide.co.uk/product...calculators/mortgage-affordability-calculator
If you enter figures with and then without your pcp/loan payments included you will see the difference that it makes.
A second credit check as described in the OP is unlikely to be a deal breaker on a mortgage application
