How dare they approve my auto loan!

[bankworking]

So, I was talking to my bank's credit counselor (wonderful person. Any of our customers can sit down with her for free budgeting and credit advice.) and she wants to know if I can give her some information to help her with a client she's working with. Apparently the client is very upset because she is on a fixed income and was approved for a very expensive car loan... which she got and is now having trouble affording.

Credit counselor can give a lot of general reasons why someone might be approved for too big of loan for them. Since we are rather conservative about our approvals, it is usually that they have bills that we had no way to know about that are not typical for the average household, for instance medical issues or (as in this woman's case) "I can't say no to my grown children even when the money I'm giving to them is preventing me from paying my own bills" syndrome.

So, I look up the loan approval to help the counselor get a better picture and find out a couple of things.

1) The woman did NOT do the loan on her own. She had a co-signer, who she listed as her spouse (false as it turns out, it was another relative...makes a difference because when a spouse co-signs they tend to expect that they are also paying the loan. When a relative co-signs they tend to expect that they are "guaranteeing" the loan, but that the primary person will be the one paying).

2) While woman alone did not have the income to support the $38,000 auto loan, "spouse" had MORE than enough income. Especially since neither of them had any other significant loans outstanding.

3) Both also had 800+ credit scores.

So there is NO reason on earth that we would NOT approve her loan.

But apparently, we should have known that she couldn't afford such a large auto loan and denied giving it to her, and so her expensive purchase is OUR fault, not hers.

[Bright_Star]

Why get a loan if you know you can't afford the payments? Jeez, people can be their own worst enemy at times.

[Pixilated]

OMG, that is SO true. What on earth goes through these people's minds??

And yet another instance in which you were supposed to read an SC's mind ...

[bainsidhe]

Why get a loan if you know you can't afford the payments?

Lack of proper budget or (as in this woman's case) unwillingness to stick to a budget.

And 38K for a vehicle? *faints* To each their own, but she probably lost a good 20% of the value immediately to depreciation. Not to mention her monthly payment is likely more than I pay in rent.

[MoonCat]

So, wait, she LIED on the application by stating the co-signer was her husband....then proceeds to piss away her money by giving it to her kids, who are doubtless learning their "budgeting skills" from her; and yet it's your fault that she can't make her payments?

Talk about stupid.

[Aria]

And 38K for a vehicle? *faints* To each their own, but she probably lost a good 20% of the value immediately to depreciation. Not to mention her monthly payment is likely more than I pay in rent.

So true! My current car cost over 50k Canadian brand new. I got it with 100k+ miles on it, 6 years later, for 14k. It's awesome.

[LillFilly]

Aaaannnd there goes another thousand brain cells from reading this!

[Seshat]

I've met people who assume that the bank's lending staff know what they can afford: and are, in fact, better at knowing that than they are.

[Kittish]

So, the bank is expected to know what she actually CAN afford to pay, and be her nanny? You just KNOW she'd have bitched and whined and carried on and on and on if her loan had been denied. It's one of those you just can't win situations. And when she finally falls far enough behind on the car payments that the car is repossessed, that will be the bank's fault as well.

[morgana]

(as in this woman's case) "I can't say no to my grown children even when the money I'm giving to them is preventing me from paying my own bills" syndrome.

I know someone like this. Makes me want to tear my hair out. How stupid can people be? And how selfish and entitled can her children be? (I know, I know, she made them that way. Rhetorical question.)

She's retired. She owns, and is about to be foreclosed on, two houses. She lives in an apartment, because her children live in the houses. And of course do NOT make the payments. And she's scrambling about to figure out how to avoid having these two houses foreclosed.

She doesn't complain to me about it anymore, though. Because I told her flat out what she needed to do about it. And she won't . . .

[Lovecats]

And I'm excited that my car (which cost way less that half what hers did) will be paid off next month. And no way am I trading it in for another one. It runs well, gets good gas mileage.

[PepperElf]

and i'm betting if you DID know that she couldn't afford it and denied her the loan she'd have bitched about that too.


some people just do not understand what the phrase "personal responsibility" is

[Caractacus_Potts]

When I first went looking for a house about eight years ago I was approved for about a $400,000 loan. Based on interest rates and what my monthly payments would be I capped my purchase at about $150,000 and wound up buying a condo for about $89,000 (and don't think I didn't figure in the condo fees, insurance and property taxes as part of my monthly expenses!).

[AccountingDrone]

When I first went looking for a house about eight years ago I was approved for about a $400,000 loan. Based on interest rates and what my monthly payments would be I capped my purchase at about $150,000 and wound up buying a condo for about $89,000 (and don't think I didn't figure in the condo fees, insurance and property taxes as part of my monthly expenses!).

Sort of what Rob and I did - he was approved for $250K US, and we capped it at $100K, found a place for $91K and are almost paid off.

And I paid cash for my current jetta, and owe nothing on any of our cars. We got our pickup truck from freecycle. It needed a new brake master cylinder and a battery.

[taxguykarl]

Sort of what Rob and I did - he was approved for $250K US, and we capped it at $100K, found a place for $91K and are almost paid off.

We too bought less house (i.e. less pricey) house than we could have. Also I refused to even consider an adjustible mortgage--talk about vindication.
Our vehicles are paid and credit card will be very soon.