Nothing punches harder than a rejection for a car loan application. It’s even worse when you need the loan to replace a family vehicle. But it’s important to know that several factors come into play when it comes to rejection.
One of the reasons could be that your credit score is too low for the lenders. Another factor is your financial history. It could be too damaged for potential lenders to work with.
Before you can think of a solution, look at the problem. That way, you have a better understanding of how to approach the problem. Here are some of the major causes of a car loan rejection:
Bad credit history
This is an excellent example of how the past comes back to haunt you. For a lot of people, sudden changes in employment and emergency payments like medical and car repairs can put a substantial dent in your credit. Especially if you fail to pay it for more than a few weeks.
Try to improve your bad credit little by little before sending in another loan application. With the improved numbers, you can have an increased chance of approval.
Too many applications at once
When you submit too many loan applications at once, lenders may see it negatively. They see it as credit stress and sends the message that you need the money badly. That’s why you shouldn’t apply for multiple loans at once. Instead, send in your applications one at a time and wait for a response.
Another factor is your income. It could either be not enough, or unstable. If you are currently unemployed, then lenders will turn you down. That’s because they are looking for people who have a steady income. If you work freelance and don’t get payments regularly, they will also turn you down.
For lenders to consider you, you need to have a steady income. That also means you need a stable job. Avoid submitting applications before you find a place of work that offers the best income for your family.
Aside from income, employment, and past loan transactions, lenders also look at your savings. Making deposits regularly will put you in a good light with lenders. However, if you don’t have a savings account, or have a stagnant one, it can paint you in a negative light. So, make sure you make deposits regularly to ensure that it grows over time.
How to get a car despite all of these problems?
Rejection from your car loan has its downsides. However, there is still hope for you to get the car you need.
A car lease through a bad credit car financecan help you in two ways. First is getting you a vehicle, and second, helps you to rebuild your credit.
Compared to a car loan, a car lease is much more affordable. Approval is also a lot easier. The best part is that you can even discuss the payment method and how much each week you need to pay with the agents.
When all is said and done, you can drive out of the lot in a car and drive yourself to work and run groceries among other activities. So, if you have bad credit and need a car, consider a car lease.