After much careful consideration my wife and I decided to take out a loan for some home improvements – the first loan other than our mortgage and a 0% credit card which is paid off in full next month (separately from this loan) in about 20 years. We decided to do it as the cheap credit (3.3%) was preferable than being penalised for using tied up funds. A few clicks online and then I pressed 'apply'.
I assumed I would then have to wait whilst it was actually checked but the next page (which flashed up quickly, just like I had just bought some cheap tat from Amazon) said 'Thank you, your funds are in your account'. So I checked and yep - £10,000 had been instantly credited to me.
Right then... coke and hookers is it?
Blimey thats a fast £10k!
[i]Right then... coke and hookers is it?
[/i]
Not for you fella. Home improvements are your only thrills.
Not for you fella. Home improvements are your only thrills.
I know 🙁
Although a part of the improvements are in the garden and I got to use a chainsaw for the first time ever last weekend 😈
£10k should just about cover a new patio and bike
Yup. Was pretty astounded when I bought a car. Sign, sign, sign, bank account details, here are the keys.
Gone are the days where I'd laboriously count my money (twice). Sigh. Hand it over. Hold onto it a little bit longer than I should resulting in the recipient gently tugging at it and reminding me to let go.
A lot of smart people are working on smoothing what they call the "friction" of payment so we'll consume more. Kind of sucks in some instances where they couple it with marketing to people who're vulnerable to it I guess.
£10k should just about cover the new patio that the wife is under whose name the loan is in.....
they love it. It's shameless. Some years ago, when my finances were in a pretty poor state, my bank automatically upped my credit limit from about £3K to around £10K.
They knew that 10K was almost double my annual income; there was no way I could have serviced that were I to actually use this credit. I phoned and asked them to put my credit limit back down again. They did so.
One month later it went straight back up to 10K... 😐
Not for you fella. Home improvements are your only thrills.
Plasterers radio like a hookers face?
Did the same the other week with Zopa.. ended up going for 15k even though I only wanted 2/3s of that but the apr was the same 3.2% for 5 years. Came through in 30 seconds with a "yes" and cash was in the bank 2 days later.
It's a weird feeling.. I never loan anything (other than a mortgage). But it seemed more sensible to borrow the cash over 5 years than spend it from savings just for a bit more flexibility. 70p interest a day for 5 years is nowt for the flexibility.
Hopefully once the campervan is done it'll much more profitable than any interest incurred on it's purchase too!
No wonder some people get into unmanageable debt so easily
Your situation doesn't really relate to that statement though does it.
For you to get a loan approved (and fulfilled) as you describe, it was presumably done through your bank, who know you (and your credit worthiness) already.
So what you have got, is "manageable debt"
Someone with a poor credit history, or who couldn't afford the repayments would find the situation quite different.
Kind of sucks in some instances where they couple it with marketing to people who're vulnerable to it I guess.
Yeah that's the thing - if it is that easy to get the money, it is that easy to get into debt.
Someone with a poor credit history, or who couldn't afford the repayments would find the situation quite different.
I accept that is true, but what surprised me was that there was clearly no human approval process so surely it must be easy to slip through a net.
An example - I put down my net annual profit from my business as my income (as they instructed) however I very rarely take the full amount as drawings and what they see going into my account each month is considerably less.
It's the pay day loan crap you want to watch out for and feel sorry for the people getting suckered into them.. not the 3.2%'s over long periods.. 3000% aprs now that should be criminal.
I accept that is true, but what surprised me was that there was clearly no human approval process so surely it must be easy to slip through a net.
An example - I put down my net annual profit from my business as my income (as they instructed) however I very rarely take the full amount as drawings and what they see going into my account each month is considerably less.
Your bank has already "scored" you before you even fill out the form.
They already know how much they are willing to lend you, based on what they already know about your ability to pay it back.
You just happened to have picked a number that was lower than the one they had already approved.
A few years ago my OH was working in London on a two year temporary contract, earning considerably more than I was.
We went to see a mortgage lender, not to take a mortgage at that point but just to find out what our options were. They did some calculations, then offered us a mortgage of £350k based on our current salaries with no consideration for the fact she was on a fixed term contract.
As it turned out, she quit after 18 months due to ill health and didn't work for about three years. She's just started work again last year, doing 30h/week for a local charity. We'd have done well there with a £350k mortgage, wouldn't we. The monthly repayments would probably have been about the same as my entire salary.
I could borrow £30K from my bank instantly which I find both incredible and tempting.
How long would £30K last if I were to bum about biking, hiking and fishing, living out of bothies?
Enough time to wipe out the history of the unpaid debt? 🙂
You'll be back in a year. [img] 
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"friction" of payment
I see that "verified by Visa" has become automated of late...
Reminds me of the Pike impulse purchase the other day. Saw the thread and did a bit of thinking with no real conclusion. On my phone in bed and just thought F-it. Purchased the Pikes in less than a minute. All my details were saved. Surreal how quick it was. Paypal gave me the credit option on checkout too.
Bit like the gambling thread, it's the ease of access to make the purchase, but also get the funds. Scary. Imagine if that was a £10k Santa Cruz 😯
A few years ago my OH was working in London on a two year temporary contract, earning considerably more than I was.We went to see a mortgage lender, not to take a mortgage at that point but just to find out what our options were. They did some calculations, then offered us a mortgage of £350k based on our current salaries with no consideration for the fact she was on a fixed term contract.
As it turned out, she quit after 18 months due to ill health and didn't work for about three years. She's just started work again last year, doing 30h/week for a local charity. We'd have done well there with a £350k mortgage, wouldn't we. The monthly repayments would probably have been about the same as my entire salary.
Scarily that's pretty much my life right now (only we took the mortgage and it's me that lost the job!)
We did the maths based on it was affordable as long as one of us had a 'real' job and the other would always do at least a minimum wage job so it just about works.
Imagine if that was a child's face
I accept that is true, but what surprised me was that there was clearly no human approval process so surely it must be easy to slip through a net.
do machines work on commission?
you were clearly well within the bounds of automatic approval. If you'd asked for an unmanageable amount then a human might have got involved.
They did some calculations, then offered us a mortgage of £350k based on our current salaries with no consideration for the fact she was on a fixed term contract and they could repossess the property.
ftfy
Humans are a bloody nightmare in an underwriting process, they're too inconsistent and inconsistencies in the process make for poor quality historic data to base future risk polices on.
Truth is the speed in which decisions are made now compared to the past is down to faster internet and processing speeds it's really not that complex.
Combine income data with lifestyle data (dependants, employed full or part time etc) and existing debt answers ability to repay, payment history says of you're organised, disorganised or reckless, quick spin on the fraud and identity threat database and Bosch, done.
If you couldn't afford it, you probably wouldn't have gotten it and if the speed that it's done makes you decide before you're ready you've got 2 weeks to cancel no harm no foul.
I thought redundancy may happen (and it did) and my credit card company were offering 0% money transfers so I took £9k off them, having hardly used the credit card for years. I then paid back the minimum for a few months, until I knew I was back in work and safe.
2 months into this they upped my £11k credit limit to £19k, basically saying "when you didn't use the card you had a high limit, but now you use it and pay next to nothing off it you can have loads and loads more cash". Crazy.
I think in France they have a holding period. You apply for it, then you have to wait a week between approval and payment. It's a law of some sort.
Humans are a bloody nightmare in an underwriting process, they're too inconsistent and inconsistencies in the process make for poor quality historic data to base future risk polices on.Truth is the speed in which decisions are made now compared to the past is down to faster internet and processing speeds it's really not that complex.
Combine income data with lifestyle data (dependants, employed full or part time etc) and existing debt answers ability to repay, payment history says of you're organised, disorganised or reckless, quick spin on the fraud and identity threat database and Bosch, done.
If you couldn't afford it, you probably wouldn't have gotten it and if the speed that it's done makes you decide before you're ready you've got 2 weeks to cancel no harm no foul.
I assume 'big data' has a part to play too, if they can see everyone current accounts it'd be interesting to know what patterns predict a likelyhood to default on loans. For example stuff like regular spending at CRC maybe correlates to middle class, whereas a Range Rover Evoque on finance maybe says penny millionaire.
It's credit cards that used to be the big issue for unplanned unmanagable debt... Because the credit decisions are made on balance rather than exposure, you can open up stacks of credit cars without too much difficulty. I've enver used more than one but I've opened a few for various reasons (a balance transfer, intro deals... er, sales targets when I worked for a bank and we needed 1 more credit card this week...) and I've never had more than a few grand on them but the total potential limit is somewhere over £80000. I could go and spend that tomorrow. At the time I took those out, I couldn't ahve got a mortgage for £80000 but I could get unsecured, 19.9% apr debt for £80000.
That and upselling of course, I got threatened with disciplinary action one time because a customer came in for a £2000 loan and I refused to upsell it to £5000. "But he could get a better motorbike!" "Yeah but he wants £2000 and he can barely afford that"
An example - I put down my net annual profit from my business as my income (as they instructed) however I very rarely take the full amount as drawings and what they see going into my account each month is considerably less.
Who was this with? I want to borrow £15k to extend my lease but don't really want a loan but add it to my mortgage. but will get a loan if I have to. Thing is the bank would be quids in if I was default and would come out with a profit of about £160k if I fail to pay! But they will probably not lend to me this way.
Being self employed sucks when you want to borrow but seems they throw money at you if you have any kind of salary.
(Never defaulted and have good credit history, pay myself to just below the higher tax bracket and leave the rest in business and loads of equity yet you are not seen as low risk??)
An example - I put down my net annual profit from my business as my income ([b]as they instructed) [/b]however I very rarely take the full amount as drawings and what they see going into my account each month is considerably less.
This is understandable though, they know you leave it in the business for tax reasons, but it's still "yours" and that's the number that dictates your ability to service a loan.
I assume 'big data' has a part to play too, if they can see everyone current accounts it'd be interesting to know what patterns predict a likelyhood to default on loans. For example stuff like regular spending at CRC maybe correlates to middle class, whereas a Range Rover Evoque on finance maybe says penny millionaire.
Nah, Banks don't share that sort of information with anyone - your bank may use that data to help underwrite a loan but they can't share it with other banks and finance houses even if they're in the same group. I wasn't aware of any data like where customers spent, only how, so it someone is paid £2000 a month and spends £1999 it would effect the outcome, if someone is paid £2000 and spends £1800 it would have a different effect - because in the grand tradition of such things a bank is a place that will lend you an umbrella when it's sunny and ask for it back when it rains.
This was back when their was a human element.
I only hope it doesnt get like before the big crash...we went to Northern Rock for a mortgage about 2006. They offered us a 125% mortgage(!) with repayments of over £3000 a month. Our entire monthly income at the time was about £2700. Even on pointing this out, they really didnt give a monkeys, and were quite insistent that we use the 'free' 25% as basically an income as 'house prices can only keep going up' and by the time we'd blown through the free money we could remortgage and start all over again. It was utter madness. We declined.
My niece who is seventeen and has just passed her driving test, walked into a garage and bought a brand new fiat 500 on finance. This amazes me because she's still at school and works a couple of nights a week in a takeaway pizza shop. If her mum acted as security for the finance it's even more amazing as she's on benefits.
I don't begrudge her the car though as long as she continues to work hard and pay it off. I do struggle with the idea that seemingly anyone can get a new car.
Guarantor or not, you can't legally lend money to anyone under 18 and you can't lend money to anyone without considering their income and expenditure - don't get me wrong 'Finance Managers' at dealerships can be total cowboys, but that finance agreement is completely unenforceable
God, I hope it's not her mum who took the loan out in her name? That'd be even worse.
Might have to dig for a little bit more info when I see them tomorrow.
P-Jay - MemberGuarantor or not, you can't legally lend money to anyone under 18 and you can't lend money to anyone without considering their income and expenditure - don't get me wrong 'Finance Managers' at dealerships can be total cowboys, but that finance agreement is completely unenforceable
Barclays gave me a credit card at 17, I was a student and not working, only income was from a student loan. They were handing them out to anyone who wanted one at the local bank.
How long ago were you 17 though?
I couldn't even buy a bike in Halfords when I was 17 (2003) with a debit card as it was over £300 and the banking system would only confirm that much in my account before taking payment despite the money being there (or some reason along those lines).
IIRC they can/should get fined for giving credit to an under 18. And the contract aspect of it (the credit agreement) is unenforceable as under 18's can't sign contracts.
1996. I actually went on to blow the £750 credit limit in about 10 days and took me about 4 years to pay back! Lesson learned after that.
Pre "the crash" this forum, and others like it, was full of folk complaining that the banks wouldn't give them more credit.
The flip side is our daughter was getting married , we had the money for it in our current account , wanted to increase our credit limit to £4000 but we're only allowed to go up to £3500 without going through stringent tests . That's what you get for always paying off your credit card bill without incurring interest , no longer having a mortgage and being with the same bank for at least 30 years . No way of showing you can manage debt apparently????
No way of showing you can manage debt apparently????
I had similar, I couldn't get a credit card with my own bank despite asking for a credit limit lower than my debit account was in the black!