AFTERPAY LIMITED (ASX:APT) - If you use Afterpay, your bank might reject your home loan application, 42040679, page-34 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

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391 Posts.

73

18/12/19

23:39

Post #: 42040679
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Originally posted by jab800: ↑

"The truth is, you simply have substituted one credit facility for another, your real issue was serviceability under stress. Not Afterpay in and of itself."

@pastperformer I couldn't agree more with a statement like this. I have had so many arguments with people who claim afterpay is getting people into debt. I always use the same response .. that being that at least with APT you don't pay interest. So, if someone uses afterpay to buy something for like $500, they're technically getting into less [potential] debt than had they purchased it via a credit card. People don't fall into the interest trap with afterpay. They get a late fee of what like $70 or something (??) and then after that they just get cut off from using the platform. whereas, with a credit card, the bank will still let you spend up to your limit, even after the interest free period. and once you're at the limit, they will just keep charging you interest every day until you pay it off. This is where people really get stuck, when they can't afford to pay off anything other than the interest payments on their maxed out credit card. This situation simply CAN NOT happen with afterpay. Yet, everyone is saying afterpay is the bad guy....

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Interesting subject so I dug out last months credit card bill which had air fares for holiday, accommodation, chrissie presents, etc and totaled some 7K. I did something I havent done for a while and looked at the minimum repayment section and I was shocked when I read how long it would take to pay off if you only paid the minimum repayment............88 years WT......? No wonder the banks scrutinise your credit cards when applying for a loan. 88 years! glad I am lucky enough to be able to pay my full amount every month.

Originally posted by pastperformer: ↑

I'd like to point out that you have implied causation between Afterpay and a possible loan rejection, I don't think that is accurate or true.

Credit assessors will look at your capacity to service your current debts and the future debt you are applying for. They then apply a "stress test" based on your credit cards being maxed at a higher rate, as well as your mortgage being assessed at a higher rate (in the case of rising interest rates). If you don't have capacity to service these debts under the stress scenario, you are denied on your application.

There is only two ways to improve your serviceability under stress, either have more income, or have less debt. In your case, I'd speculate that Afterpay was seen as a liability, ie it demands some of your Income, as such this is less income available to service other debt.

In essence it would be exactly the same as having say a credit card with a $5k limit. The truth is, you simply have substituted one credit facility for another, your real issue was serviceability under stress. Not Afterpay in and of itself.

That's why the articles and other like it are completing misleading.

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Originally posted by Checksmcgee: ↑

I didnt say it affected me borrowing. It was just a recommendation from the broker to supply something showing the balance owing. Not yhe bank at that point. We both have zero debt apart from another mortgage. We own our cars, bikes and have no credit cards, store cards or personal loans. She didnt need to close the account but did. Its now re opened. My point is the bank will want to know the balance if they see transactions in your statements

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APT Price at posting: $29.10 Sentiment: Buy Disclosure: Held
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