Why you didn't get approved for a Car Loan
There’s nothing more frustrating than going through the entire car-buying process only to find out at the end that you didn’t get approved for a car loan.
While it may appear as if your whole world is crashing down on you after getting denied, it’s possible that you’ll simply need to make a small adjustment or two in order to improve your chances in the future.
Credit Score
Your credit score is the main factor in determining whether you qualify for your car loan.
Being out of work, having other outstanding debt, and missing payments in the past are all things that will negatively impact your score. Also, if you’re fresh out of school and still have a large chunk of OSAP to pay off, you may have a more difficult time securing a loan.
If you can, pay off some of your outstanding debt before re-applying for a loan. This may take some time, but it’s also the most financially responsible way to go. If you really need a new car right away, consider asking your spouse or another family member to be a co-signer.
Wrong Information
Even something as simple as a spelling mistake could be enough to have your application rejected. Fortunately, if that’s the only thing wrong with your application, you won’t have to worry about getting approved once you’ve corrected any errors.
If your supporting documentation is accurate, you could still run into problems if there are mistakes in your credit report. Obtain a copy of the report and make sure everything is correct and up-to-date. If you notice any errors, it’s your responsibility to contact the credit reporting agency to notify them of any blunders.
In the future, it’s a good idea to double-check all your information before sending it in for approval.
You have Inconsistent Income
Unless you’re working a classic 9 to 5 job, a bank may be unwilling to lend you the money you desire if they fear you won’t be able to make steady payments.
Even if you’re taking home a sizeable income, a bank can still deny you if the majority of your earnings are coming in the latter half of the year for example. By pairing up with a co-signer, you can eliminate this problem by sharing your loan with someone else, such as your spouse.
Too Young
Sometimes, age makes all the difference. You could be the most financially responsible person on this planet, but a bank can still deny you if you don’t have the credit score to prove it. If you can manage, wait a few months to build your credit and apply again. Otherwise, it may be in your best interest to find a co-signer to get the loan approved.
No credit can be interpreted as negatively as bad credit funny – or not so funny enough.
Too Expensive
At the end of the day, you may just be asking for too much money. Look around, and see if you can find a less expensive vehicle that fits your needs. It may not be your dream choice, but if it’s safe and affordable, it could still be the right car for you.