Shopping for a car is always an exciting event, but unfortunately, it can be destroyed if you get denied on your auto loan application.
According to Experian, there are two major factors why lenders deny car loans, “problems with credit and problems with income.”
Problems with credit may be the negative items that impact your credit score, which are: high credit card balance, too many recent inquiries, collection accounts, late payments, bankruptcy and other public records.
Problems with income may mean that you don’t have enough work history or your debt-to-income is too high.
Some other reasons for car loan application denial can be if there are any mistakes in paperwork, “such as misspelling a name or listing an old address.” Also, make sure that you submit all the required documents.
Banks can also deny your application if you request too much with not enough income to back it up.
Before reapplying for a car loan, find out what was the reason for your previous denial. Read your declination letter and request a free copy of your credit report; by law, you are legally entitled to have a copy of your credit report.
What to do next?
If you know that your credit score is low, consider fixing it first: start making your monthly payments on time, avoid too many inquiries and keep your credit card balance low. If you are experiencing financial hardship, consider calling your bank and explaining to them the reasons for your financial hardship, and what you are doing to fix it. They might be able to help you out by lowering your monthly payment, interest rate or offer some other options.
Experian, a consumer credit reporting company, has a new free service that helps to boost your score instantly by giving you credit for the utility and mobile phone bills.
If your credit score is OK, but you still got denied, consider finding a co-signer with a good credit history.
Call us 800.234.6999 to discuss other available options.
The content provided in this blog consists of the opinions and ideas of the author alone and should be used for informational purposes only. Autoland LLC disclaims any liability for decisions you make based on the information provided. References to any specific commercial products, processes, or services, or the use of any trade, firm, or corporation name in this article by Autoland LLC is for the information and convenience of its readers and does not constitute an endorsement, control or warranty by Autoland LLC.