Were you recently denied a car loan? Don’t worry, it’s not the end of the world yet. We know it can be tough but if you fight through the disappointment you may just get that loan yet. This article will cover the common reasons for car loan rejection in Oakville and how to fight them
The Usual Suspects
There are 5 key reasons for car loan rejection in Oakville
Asked for too much: This is generally based on some of the other factors below as well but basically everyone has a limit somewhere where lenders will not be willing to lend above. If you try and get a loan above that then they’ll just flatly reject it and you’ll have to ask for something less.
Bad Credit: If you have a low credit score (anywhere under 600 really) Lenders will not like you and they’ll be much less likely to approve your loan. Even in the 600-680 range it’ll be tough but less impossible.
No Credit: This is one of those fun quirks of finance that seems silly when you think about it. Having no credit is an entirely separate issue from having bad credit, having no credit means you’ve never bought anything on credit before so you don’t have a credit score at all, your score is N/A. Lenders hate that.
Application Errors: Everyone makes mistakes and sometimes it is that simple, any mistake on your loan application will result in it being rejected, that’s because the lender can’t tell if it was an honest mistake or an active lie and they default to the latter.
High DTI: Your DTI (Debt to Income Ratio) is a simple calculation of your income vs your debt. If it’s too high, somewhere about 50% generally then Lenders will not want to give you a loan, figuring you have too many already.
What to Do
Frustratingly lenders are under no obligation to tell you why your loan was rejected in Oakville, usually they’ll give you one if you ask but if they don’t you’re going to have to do some detective work. Look at where your credit score is at, what your DTI is doing, make sure there are no errors. It could be any or all of these things.
Once you’ve deduced the problem, fixing it will depend on the problem, and some problems will be fixable faster than others.
If the issue was an error then simply fixing the error should be enough to get you the loan, likewise if the issue was the loan amount asking for less will get you the loan (Though that may not be a desired solution).
If the issue is bad or no credit, then you’ll have to take a few months to build up that score. We have articles to help with that already like this one.
If the issue is a high DTI really the only thing you can do is pay off some of those pre-existing loans. The more you pay off the lower that number will be and the happier lenders will be too.