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What to do if your car loan application was rejected

What to do if your car loan application was rejected

If you have applied for a car loan and had it rejected, it’s not the end of the world. You may have some work to do to remedy the situation but nothing is forever and there are some simple ways to ensure your next application is successful.

If you apply for a car loan through Car Nation Canada, we will discuss everything with you. This includes any reasons for the rejection of your application. Our team is experienced enough to recognize most of the signs before we submit the application so can prevent it happening but if you applied elsewhere, here are some practical next steps.

Check the application

If you still have access to the application, check it. Make sure you got your numbers straight. Make sure you didn’t put a decimal point in the wrong place or get an employer or previous address wrong.

Go through the whole application double checking everything on the form. It’s easy to make a mistake and they are very easily remedied. Correct any mistakes and contact the lender so they can reassess.

Ask the lender why

If your application was correct, contact the lender and ask why you were rejected. Some will tell you as part of the rejection process while others will need to be asked. They should tell you exactly why you were not successful so you can do something about it.

If the lender has been fair and you would work with them again, ask them what exactly needs to be improved for you to be successful next time.

Make improvements

Depending on what the lender says, go about making the changes they suggested would have you accepted next time round. That could be improving your credit score, having more complete wage slips, bank statements or other paperwork, having more reliable income or something else.

It could also be that you asked to borrow too much. This can be easily addressed by saving up more for a down payment or borrowing less and buying a cheaper car.

Affordability has a huge influence over car loans so anything you can do to make it look as though you could easily afford the amount you’re looking for will help your application. That could include getting a second income, using a co-signer, waiting until you have a larger down payment or something else entirely.

Improving your credit score will take longer. Use a credit card for gas or groceries and pay it off in full at the end of each month. Get a contract phone or pay for insurance monthly and make sure to never miss a payment. After a few months your credit score will begin to improve. Get it to the level the lender requires and apply for the car loan again.

Nobody likes rejection but it isn’t the end of the world. As long as you know why it happened, you can do something about it.

If you’re unsure about qualifying for a car loan or would like help with an application, Car Nation Canada will be happy to help.

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