3 Mistakes to avoid when you get an offer of Finance

I was speaking to a really nice guy last week, who has been using us to arrange his business finance for years and he was very close to making 2 out of 3 classic mistakes. 

He asked us to get a 100k over 3 years with no penalty for early repayment. Which we duly did, I rang Denis up a week later and I asked him if he still wanted the loan.

The First Mistake

He said, Mark " I am not sure how much I actually need, I can probably get away with 70k" 

The figures change over the size of the loan, but this is a common issue.

It is easy to think, I have been offered a 100k, I will take 70 which should be okay and if I need another 30k, I will just go back and take it.

Unfortunately, it rarely works like that, for the following reasons.

1) You may not be allowed to reapply at the finance company for a top-up loan for several months.

2) A new full application will need to go into underwriting and will be assessed where the company is that day, and if the cash flow has deteriorated in any way, this can have a big impact on the rate offered.

3) An underwriter will have less faith in the companies management as they have got their cashflow figures wrong by a third in a few months.

This could lead to a separate loan been drawn up at twice the interest rate

and now leaving the business with 2 monthly payments to make ( this is the main reason we do so much debt consolidation work)

The Second Common Mistake.

The Director receives a Loan offer, but can't decide whether to take it and the offer expires.

No problem they can just reissue it, they have already offered whats the difference.

Unfortunately, it does not work like that.

The whole process of the loan application has to start again.

The underwriter might think.

Are they going to waste my time again and we will have to put the money we have allocated to them on hold again, whilst they make up their minds when we could offer it to someone else who wants it now.

Is there an issue, that we do not know about or is the company run by indecisive management.

Or the underwriter might discover.

That the bank statements are showing that the cashflow has now become tighter than it was, or that the directors have been to multiple finance companies to try and get a better deal ( and clearly could not).

Any of the above will severely effect the new loan rate offer if they decide to re-offer at all.

The Third Mistake

Denis (my client) did not make this mistake, he knew I could get him a better offer than he could by going direct.

Without going through the reasons, let me just ask you a question.

Who will get the best price for a car?

A customer making a one-off purchase

or

A fleet buyer, who buys 50 cars a year.

The fleet buyer walks through to the VIP area and speaks to a "Can Do" senior member of staff that they know, and then the finance director has to sharpen his pencil and offer a really good price, as they will not want the fleet buyer going to another company.

It's pretty much the same with a good finance broker, I have been having lunch and golf with some of these finance companies for over 20 years, they want my business and give my clients a great deal.

Please call me if you want to discuss your options on 0800 612 5364 or 07710 466166