I keep reading about the credit crisis, and how it’s becoming increasingly difficult to get loans/mortgages/whatever. My only real-world experience with this is that my nephew, a 20-year-old with a semi-full time job (construction, it comes and goes), had no problem getting a loan for ~5K to buy a car right around the week the whole financial crisis got into the media.
So… is it hitting consumers yet? Anyone with decent credit being turned down?
We got preapproved for a mortgage last week, but decided not to buy the house because there was too much risk. But the mortgage had a 50% downpayment on it…
I was approved for a school loan several weeks ago. I’m not sure if the current crisis has hit educational institutions yet, but I’m sure they’re affected in some way.
I got a loan for a (used) vehicle a few weeks ago. But I have a long and very good credit history. The dealership even let us take the vehicle home before the loan was processed - I brought the check in about 4 days later.
On the other hand, I’d heard on the news a few nights ago that almost 4 in 10 car loan applications are being denied. Not sure how bad your credit history has to be for a denial to happen, but it seems to me maybe those folks who are being denied now probably shouldn’t have been approved in the past either, or we wouldn’t be where we are now, economically speaking.
Since I review, approve and deny loans on a daily basis, I can tell you that from a consumer standpoint, there is little change.
If a bank has less money to lend, they won’t summarily turn down more applicants - they will raise rates to lessen demand.
What you’re seeing if 4 out of 10 people are being denied, means that there are more applicants who don’t qualify due to many different reasons, including:
So, your average Joe with good credit and little debt will still qualify, just as they always have. It just means that rates or the terms may be different than previous loans.
I got a 95% mortgage in August. No problems in getting accepted. Athough for some reason they insisted on arguing over a £500 difference in the house value.
The people who have problems getting loans now are the people who had problems before the lenders dropped all the standards.
If you have good credit, verifiable employment and the proper debt-to-income numbers, and everything else is in order, you are okay. If you can’t put 20%, there are still programs for those with good employment and good credit.
Where the good worker with good credit is getting into rejections: When the home appraisal comes back low and they can’t refinance, or sometimes buy outright.
If you want to buy a 350k home, but the appraiser comes back with ‘declining market’ as the bottom estimate, the mortgage company ain’t gonna touch that deal. If you have a 6.8% mortgage and want to take advantage of today’s low rates to refinance, but your mortgage is 200k and your house has now dropped from 240k to 200k, you have no equity and really can’t refinance.
Just bought two cars this month with loans. No problems or issues.
We purchased a new car last week, financed through Honda Credit at 1.9% with $2000 down. No problems with the financing. My husband and I are both employed at one of the few remaining big financial institutions that are doing well, but they were only willing to finance at 5.72%. Either way, it was pretty easy to get a car loan.
Just bought a new Volvo and they were falling over themselves to lend me the money.
No loan applications lately, but one of my credit cards just raised my limit by $2,500.