Can’t Get Approved for A Car Loan? Here’s What to Do

Posted : April 19, 2024
can't get approved for a car loan

If you can’t get approved for a car loan, rest assured, it is common for a lender to reject your car loan application for various reasons. In certain situations, you can get a car loan approved by working on your reasons for denial. This blog will explain some of the common reasons why you might have been denied a car loan and what steps you can take to get car loan. 

Reasons Why You Didn’t Get a Car Loan Approval

Various lenders reject applications for car loans of people for many reasons. But you need to find the reason and work on it. Here are some of the reasons why Canadians get denied car loans by lenders.

Credit Score is Low: When you go out to get a car loan, most lenders need a minimum credit score. Most lenders like to see a credit score of at least 600 or above. If you have a lower credit score, there is a high risk that you might not be able to repay the loan on time. Poor credit history puts you in the category of a high-risk borrower. 

Incorrect Information in Your Application: A lender can deny to give you an auto loan if there are errors found in your application form. For example, if you miss out on filling a certain section on your form or if you have filled in incorrect information, your application can be denied. Most lenders will not tell you the reason for your denial of a car loan. So, it is advisable to submit your application accurately. 

No or Low Credit History: Every lender wants you to give a loan to a responsible borrower. They decide by looking at your credit history. If you have not used any credit in the past, then they may find you a responsible borrower. Having a low credit history can be one of the reasons for not getting a car loan. 

You are in Debt: If you have an outstanding debt owed from other credit cards or loans, you will have an increased debt-to-income ratio. If you have over 50% debt-to-income ratio, lenders may deny a car loan to you.

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How Can I Get Approved for a Car Loan?

If you are thinking of, how do I get a car loan even after being denied, here is your comprehensive guide. Explore a few ways in which you can obtain an auto loan in time. 

Connect with Your Lender: The best way to not get rejected again is by contacting the lender and finding out the reason for your denial. Once you get to know the reasons, you can work on improving the factors until you decide to apply for a car loan again. If you get an error on the application, you should re-apply the car loan by making adjustments to get your car loan approved.

Work Towards Improving Your Credit Score: The best way to get approved for a car loan is by improving your credit score. If you get rejected due to a low credit score, take a few months and improve your credit score by consistently paying loans or credit payments on time. If you fail to pay it on time, your chances of getting a car loan approved can be reduced. It is equally important to check the accuracy of the details mentioned in your credit report. 

Reduce Your Debt: A lender can reject your auto loan application in case of large outstanding debt. Make sure to lower your debt amount by paying all installments on time and in full. Additionally, don’t take any new loans if you want a car loan approval on time. 

Get in Touch with Poor Credit Lenders: In Canada, some lenders work with poor credit. Consider finding a lender who is suitable with people who have poor credit scores. However, these lenders might charge a high rate of interest so it is important to compare several lender rates before choosing the right one. 

Get a Co-signer: Consider using a co-signer for getting an approved car loan. Having a co-signer in your car loan will make them responsible for paying if you fail to make the payments on time and in full. It is important to ensure that you pay your loan on time every month before making the co-signer responsible for it.

If you follow these steps thoroughly and connect with the best lender, you can get an approved car loan easily. Having proper financial management and on-time payments can assure you of the best and most guaranteed car loans in Canada. So, look out for reasons for denial and work upon them to get approved car loans in Canada. The reasons for denial however may vary from lender to lender. Seek professional advice from a car finance expert to find out how to get auto financing loan through a hassle-free process, with the desired rate and terms.

Jack Fortin
Auto Finance Expert

Jack Fortin is one the leading car loan and auto finance experts in British Columbia, Canada. He loves to write and share car loan news and updates.

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