Turned down for car lease

[Solly]

Well not turned down, offered 1/2 of the amount needed for our sales persons car, offered just under £25K

Slightly disturbed by this, the company has no debts, accounts all up to date, we have a corporate card, which is paid off monthly, reasonable cash float in the bank, positive cash flow, and lease terms are a fraction of free cash, to the point where we can pay 9 months in advance for the lease.

One director has little credit history (no credit card, never had debts or mortgage) etc. Never needed them.

Is it the lack of credit history which is causing us problems?

 

[Gordon - Commercial Finance]

Well not turned down, offered 1/2 of the amount needed for our sales persons car, offered just under £25K

Slightly disturbed by this, the company has no debts, accounts all up to date, we have a corporate card, which is paid off monthly, reasonable cash float in the bank, positive cash flow, and lease terms are a fraction of free cash, to the point where we can pay 9 months in advance for the lease.

One director has little credit history (no credit card, never had debts or mortgage) etc. Never needed them.

Is it the lack of credit history which is causing us problems?

Potentially what we would call a “weak credit profile” where there’s limited history for a lender to make a judgement.

Also a few lenders are feeling a bit naked in the car world as residual values are suffering, costing lenders a spadeful.

Have you only tried one lender? Is it entirely business use or is there personal use for the director?

 

[Chris Ashdown]

How long have you been trading, that may well be considered

 

[STDFR33]

Your accounts show that your creditors exceed your current assets many times over. Perhaps lending see your company as a huge risk?

 

[Mark T Jones]

As @Gordon - Commercial Finance has said, it very much depends on whether you were turned down by a finance company or by a broker specialising in car leasing

If it’s the former, the reasons could be insignificant, possibly just that at this moment they are limiting exposure to £25k, or even that you just don’t fit their algorithms

If it’s a decent broker, then you should delve further into the reasons as you might be able to handle it another way

 

[Ian J]

Finance companies and banks are taking a much harder line on underwriting at the moment whether it's personal or business transactions

 

[AllUpHere]

If you've only got 9 months worth of a salesman's car payments as cash at bank you are sailing pretty close to the wind. It wouldn't take much for you to be struggling to make the payments and they'd be repossesing a car that's probably worth 10 grand less than it was when they gave it to you. Not a very tempting deal for a finance company.

 

[Gordon - Commercial Finance]

After posting I had a look at the accounts, and as alluded to above the balance sheet is in a massive negative position. There may well be good reason for that which hasn't been explained to whichever lender looked at it, but I would be surprised if that's not the reason.

 

[Chris Ashdown]

In Fact it looks like 2016-17-18-19 were not what you would call good years, so hard to understand why you would feel the need for a £50,000 car to make matters worse

 

[Ian J]

After posting I had a look at the accounts, and as alluded to above the balance sheet is in a massive negative position. There may well be good reason for that which hasn't been explained to whichever lender looked at it, but I would be surprised if that's not the reason.

It also doesn't help that both directors live in Turkey

 

[KAC]

Your accounts show that your creditors exceed your current assets many times over. Perhaps lending see your company as a huge risk?

I agree and nothing about "Going concern basis"

 

[Gordon - Commercial Finance]

It also doesn't help that both directors live in Turkey

Eagle eye Ian. I didn’t even spot that.
I’m surprised even the 25k was on offer!

 

[Mark T Jones]

Interesting points.

There might of course be a story behind the story. ( or there may not)

This stuff matters.

 

[billybob99]

Just buy one cash.

Cash is king.

 

[JEREMY HAWKE]

Why the obsession with buying and leasing things that bring in no money when you don't have the funds

 

[STDFR33]

Just buy one cash.

Cash is king.

It but they’ve hardly got any.

 

[Mark T Jones]

This thread could be used as a case study on the relative merits of telling people nice stuff to get the answer you want vs telling the truth to get a meaningful answer

 

[Chris Ashdown]

Somehow I don't expect the OP to come back

 

[Bob Morgan]

Just buy one cash.

Cash is king.

£50K for a Salesman's Car? - Jeez! Give him a Van and tell him to park it around the corner from the Client/Customer Office! Jeremy? - Do you still have that Bedford CF available?

 

[JEREMY HAWKE]

£50K for a Salesman's Car? - Jeez! Give him a Van and tell him to park it around the corner from the Client/Customer Office! Jeremy? - Do you still have that Bedford CF available?

It is worth more money than the OP has
I do have a Y reg LDV flat bed if I sort the rear diff out it will be a toss up between local deliveries or selling it to the OP

 

[MBE2017]

Why would a salesperson require a £50k car? Seriously?

 

[billybob99]

Why would a salesperson require a £50k car? Seriously?

So they look like a good salesman earning lots of commission.

 

[Chris Ashdown]

What sort of car can you get nowadays for £50k, I honestly have no idea of modern car prices, nowadays i drive my wife's car a fiat Bravo 10 reg with nearly 30,000 miles on the clock, unusual to go more than 20 miles away most months. Liked my Freelander but that went with the company

 

[Ian J]

What sort of car can you get nowadays for £50k, I honestly have no idea of modern car prices,

A bloody good one, especially if you are happy with an ex demonstrator

 

[MBE2017]

£50k would get you a BMW i8, under 5k on the mileometer.

 

[Solly]

There is slightly more to the story,

1. It is a company I advise and not the one I own,
2. After taking into consideration a number of things (chiefly tax) a top of range electric car works out only marginally more expensive than a more standard regular petrol car.

 

[Porky]

@Solly

Sounds like the potential credit providers to your client are nervous for whatever reason, market conditions won’t be helping, no guarantees their business will trade as well this year as last due to Covid and of course cars are god dam awful at retaining any value in a default situation.

Sounds like your client should suck it up, pay the bigger deposit, or set their sights lower. If your clients in a position to drive a car of this value they should be able to put up the bigger deposit?

From own perspective £50k on a car is a bit excessive in the current climate but guess it’s all relative....

 

[Solly]

Totally agree, but to be fair the sales person has done a decent fist in his first 6 months and revenue is rapidly rising. I will talk to some other companies and see what they can do.

Thanks everyone for the advise.

 

[Red Wood]

Why the obsession with buying and leasing things that bring in no money when you don't have the funds

I'd argue a car for a sales rep to do their rounds would bring in revenue... Company and product depending of course

 

[Solly]

Covid has somewhat dented that argument

 

[Mark T Jones]

Totally agree, but to be fair the sales person has done a decent fist in his first 6 months and revenue is rapidly rising. I will talk to some other companies and see what they can do.

Thanks everyone for the advise.

To reitterate my earlier comment, you really want to speak to a specialist car leasing broker - If a broker declines you, you can confidently say that the problem lies with the credit.

I can introduce you to such a specialist if you like.

Before doing that however, I'd seriously consider the alternative of giving them a car allowance. I appreciate there are BIK considerations, but history shows that giving cars to sales people is fraught with difficulties - not least when they move on any you are left with a £50K white elephant around your neck

 

[Financial-Modeller]

Loan or lease?

The total cost of leasing a GBP50k car is unlikely to be much more than GBP25k over a typical 36-month lease term; particularly so if paying 9 months in advance.