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What to do if your car loan application is rejected

What to do if your car loan application is rejected

Applying for a car loan can be a tense time. Even the best prepared customer will have to sit around and wait for a little while as the lender assesses the application. For the vast majority, it will be good news.

But what if it isn’t? What if your car loan is rejected? What then?

If you work with us, our team will prepare your application in the best way possible so it stands the best chance possible. We cannot guarantee acceptance, even though we would like to.

A car loan application will usually be rejected on one of the following grounds:

  1. Incorrect information or mistake on the application
  2. Insufficient credit score for the loan amount
  3. Loan amount would take you over the income to debt ratio
  4. Insufficient evidence of income

Overcoming car loan rejection

Depending on the reason given, your next steps could include one or more of the following.

Revisit the application form

Mistakes can be made all too easily, especially if you don’t like forms. If you’re working with us, we will go through the form with you in order to prevent this kind of mistake.

If it happens to you, check every entry on every line of the form to make sure everything is 100% correct. If you find a mistake, correct it and reapply.

Improve your credit score

If you were rejected for not having a high enough score for the loan amount, you can either look at other lenders or look to improve your score. If you know your score could be better, it’s something you can do whether you borrow with another lender or not.

That involves paying off as much debt as possible, ensuring you never miss a payment, correcting any errors on your credit report and using a credit card to help rebuild credit.

Borrow less or pay off more

If the car loan would take you over the acceptable income to debt ratio, you have two options. You can pay off existing debt to reduce that ratio or look to borrow less.

Paying off existing debt lowers the ratio so you could qualify for the car loan. Borrowing less may mean more of a down payment or buying a cheaper car. You have to decide which is the most realistic for your situation.

Get your paperwork in order

Insufficient proof of income is usually for freelancers or self employed. If you’re self employed, you can use tax returns, bank statements, invoices and annual accounts to help prove your income.

The more evidence you can provide, the less likely you are to fall into this common car loan pitfall.

Nobody likes rejection but it’s important to pick yourself up, dust yourself down and address the situation. There is always a way around a challenge and we can help you find it. Contact us to learn how.

 

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