Status for a Personal Loan

[originalang]

My son is 20 yrs old and works full time. He is looking to buy a car and intends enquiring at the bank about a personal loan. Can anyone tell me please how they work out how much they might be willing to lend him, does it go on his salary and outgoings or something else? Thanks

[accountant1]

Hi,

Depending on which bank you apply for the loan with, and if you currently bank with them will take you down two routes.

If you ask for a loan at the bank you currently have a current account with, then they will take into account how you have maintained your current account over the last few years. Going into your overdraft, authorised or unauthorised, late payments or missed payments on credit cards, unpaid direct debits and the general cash flow in and out of your account will all be examined. The better you run your account, the more likely they are to issue you a loan.

They will also ask for details of income, living situation, outgoings in detail (rent, bills, food, car expenses etc) and they will tend to give you a decision there and then. If you apply for a loan from a bank or company you don't currently bank with, then they will substitute the account cash flow details with a credit check. If this is the case, I would strongly recommend getting a credit report and score before applying for your loan, to check your details on your credit file are correct. Experian have very useful reports which can be accessed immediately online.

With your son being considered in the young bracket of borrowers, then looking into all the above will be advisable. Hope this helps, and good luck with the application.

[originalang]

Thankyou so much accountant1. I'm pleased to say my son was successful today with the bank which he does have an account with. This is his first step in building up his credit towards the unenviable aim of getting a mortgage sometime into the future. Thanks again, much appreciated.