Many car buyers try to find out why they have been denied an auto loan. But you don’t have to wait for the painful rejection to happen when you can keep that from happening as early as before filing your application. We discussed below some factors that can make or break your auto loan approval.
Your credit report is probably the most crucial among your list of requirements for an auto loan. According to credit-reporting agency Experian, your credit report has records of the credit accounts you’ve had in the last 6 years. Details like late payments, repossession, loan defaults, and court judgments taint your credit standing and may cause the lender to deny your application.
Lack of credit also has the same effect on your auto loan application. Paying cash for your purchases may look good but that also means having no credit history, which could cost you a chance to own a car. It’s important for lenders to see an established credit history so they can have an idea of how you manage credit and handle payments.
To avoid being denied an auto loan because of a bad-looking credit profile, be sure to get a copy of your credit report at least 6 months before applying for an auto loan. Work to improve your credit. If you need to establish credit, you can start with credit cards or any small credit account.
Auto Loan Application
The approval process here at Boston Auto Approval Center is quick, and we guarantee that. But we want to remind you that mistakes in the application form or filling it out with incomplete information can delay the process or result in rejection. We don’t want this to happen to your application, especially when something can be done to avoid it.
Make sure to fill out the application form completely with the necessary information. Provide authentic, verifiable and honest details about you. If ever you realize there are mistakes in the information you provided, contact the lender immediately and tell them about it.
Another instance where your auto loan application may be rejected is when you send multiple entries in brief periods. If you’re denied an auto loan, stop to find out the cause and work on it first before applying with another lender. Multiple applications seem like fraud to lenders or imply that you are in severe financial crisis.
Employment and Income
You have a job—your first—and you’ve been working for that company in the Financial District for a year now. Then you decide to buy a car through a loan as you become confident of your monthly income. But did you know that your auto loan application can be denied at this state? Being employed for less than two years is not enough for lenders to judge your employment as stable. Further, career shift and resignation can have the same effect on your auto loan application if done before filing your application.
Remember that lenders use your employment status and income as parameters in gauging your creditworthiness. So, make sure they suffice as strong pieces of evidence that you can indeed repay a loan on time.