When you’re rejected for a car loan the lender in question is under no obligation to tell you why. You can ask but they might not tell you and instead you’re going to need to figure it out yourself. That’s what we’re going to help with in this article but listing the most common reasons that car loans might have been rejected.
Application Errors
By far the easiest way to be rejected on a car loan is an error on the application. If any of the numbers you provide are wrong then that’s an instant rejection. Even if your address or phone number is wrong that could be enough for the application to be rejected.
Double check your application and make triple sure all of the information is correct, if something is wrong fix it and resubmit and that should be enough to get approval.
Poor Credit
If you’re applying for a premium loan then you may be rejected for not meeting the credit standards of the lender, which for premium loans are usually quite high. You really want to be aiming for a credit score in the “good range” of around 700+.
If your score is too low then you may have to find a low credit lender instead or wait until you can build your credit up to something more desirable.
No Credit History
If you’re trying to buy your first car then you may have the problem of not having any credit history and since without a credit history the lender can’t gauge your potential risk, you’ll most likely be rejected.
In this scenario your best option is likely to find a loan cosigner, someone who takes on the risk of the loan alongside you and agrees to pay it off if you can’t, most likely a parent, as long as they have a good credit score and history.
Unreliable Income
If you’re self-employed or have another job that doesn’t have reliable or consistent monthly income then that could be another cause of car loan rejection since the lender is unconvinced you’ll be able to meet the weekly payments on time.
To prove that you’ll be able to pay your monthly fees you’ll need to provide proof, and if you don’t have any pay slips the best way to do this is with tax returns. If you can provide several years that prove a consistent enough amount to be able to pay the loans then you should be able to secure approval for the loan.