You’ve been denied an auto loan? Here’s everything you need to know Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make smarter financial decisions by providing you with interactive tools and financial calculators as well as publishing original and impartial content. This allows users to conduct research and analyze data for free – so that you can make financial decisions with confidence. Bankrate has partnerships with issuers, including but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money The offers that appear on this website are provided by companies that compensate us. This compensation can affect the way and where products appear on this website, for example, for example, the order in which they may appear within the listing categories in the event that they are not permitted by law. This applies to our mortgage or home equity products, as well as other home loan products. But this compensation does not influence the content we publish or the reviews that appear on this website. We don’t include the vast array of companies or financial offers that may be open to you. yourstockbank/Getty Images

4 min read. Published 12 October 2022

Writer: Kellye Guinan Written by Personal and business finance Contributor Kellye Guinan is an editor and writer freelance with more than five years of experience in personal finance. She also is a full-time worker at her local library where she helps the community to access information about financial literacy, in addition to other subjects. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to manage their finances through providing precise, well-researched and well-researched data that breaks down complicated topics into manageable bites. The Bankrate promises

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They ensure that what we write ensures that everything we publish is accurate, objective and reliable. The loans reporters and editors focus on the points consumers care about the most — different kinds of lending options and the most competitive rates, the most reliable lenders, how to repay debt, and much more. So you’re able to be confident about investing your money. Editorial integrity

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There are money-related questions. Bankrate has the answers. Our experts have been helping you master your finances for more than four decades. We continually strive to provide consumers with the expert advice and tools required to be successful throughout their financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our content is truthful and reliable. Our award-winning editors, reporters and editors produce honest and reliable content that will help you make the right financial decisions. The content created by our editorial team is factual, objective, and not influenced through our sponsors. We’re honest about the ways we’re capable of bringing high-quality content, competitive rates, and helpful tools to you , by describing how we earn money. is an independent, advertising-supported publisher and comparison service. We receive compensation for placement of sponsored products and, services, or by you clicking on specific links on our website. This compensation could impact how, where and in what order items are listed, except where prohibited by law. We also offer mortgage, home equity, and other products for home loans. Other factors, like our own proprietary website rules and whether the product is offered in the area you reside in or is within your own personal credit score may also influence the way and place products are listed on this site. While we strive to provide a wide range offers, Bankrate does not include information about every credit or financial product or service. An auto loan application might be denied because of your credit history or your current financial status. However, by contacting your lender and reorganizing your finances, you can work on making an application that won’t be denied in the future. Why was I refused an auto loan? Most lenders deny applicants because of credit score, credit history and overall debt. There are mistakes in the application. You can be denied the loan because of simple mistakes on the application. If you do not complete a section or write incorrect information, lenders may reject you without giving you a chance to correct inaccurate information. Be sure to review every detail of your application to ensure that you have all the information you need. It is possible to apply again however, being precise the first time will help you save time. A low credit score is a common problem for lenders. have an upper limit on credit scores as part of their eligibility criteria. In the general case, they need to see fair credit — scores of 620 or more. In the event that your score falls less than the required score and you are not able to meet the requirements, you will be rejected. There are . But these will cost more in the long run , and might have higher costs — like prepayment penalties or origination fees that are higher than traditional auto loans. Limited credit history If you have weak or no credit history, lenders will not be able to assess your ability to make future auto loan payments. They could use this as a reason to reject your application. It will take time to rectify this. You will need to take on additional, smaller debts to build your credit score before you apply again, or with a co-signer. Large amount of debt If you’re carrying a large amount of debt that you have accumulated from different loans as well as credit cards and credit cards, your DTI ratio, also known as the debt-to-income ratio will be greater. An DTI ratio of 50 percent or higher is considered a signal of danger and can cause rejection. Repaying your credit card debt is the best method to reduce your DTI however, if you’re able, a second source of income could lower your DTI. What should you do if were refused an auto loan The rejection doesn’t mean an end in itself. Do a few things before applying again to increase the chances of getting approved. Make contact with the lender Lenders must explain the reasons why your application was not approved. If the application isn’t sent automatically you can request to receive it in the 60-day period following the date of your application. In the event that it is not sent, it falls beyond an exemption to the Equal Credit Opportunity Act. If the cause was as easy as an application error, you are able to make changes and apply again. If the issue was due to your credit score or any other debts, you could improve them prior to submitting another application. Improve your credit score. Your credit score is one of the most important factors that lenders look at when you apply. Be sure to spend time reviewing your credit report and making sure you pay your debts on time , and improving your credit utilization ratio. This will take a few months. If you’re in a rush think about other options while you work to improve your score. But once you’ve built up an impressive repayment record, lenders will see you as less of a risk. Reduce your debt. Lowering your debt is a crucial factor in getting future lenders. You should focus on paying your current debts and making sure to avoid any new loans as well as credit cards. Examine your budget and make an effort to eliminate any unnecessary expenditures before reapplying. This is also a good option to lower your debt-to income ratio (DTI) which lenders use to determine if you have enough money to be able to afford an additional loan repayment. Search for lenders with low credit scores. There are lenders that accept . This may be a means to get you behind the wheel sooner rather than later. The lenders target drivers with low credit scores. But, be sure to compare your options and be aware that auto loans for those with bad credit tend to have significantly higher interest rates, which can cost you thousands of dollars in the long run. Alternative options The choices you have hinge on how you can improve your credit score or reduce your debt — though both can certainly help. “Buy here pay here” dealers A BHPH dealership is not ideal, but it could be a good option if you have a low credit score and are looking for an automobile. BHPH dealerships both offer financing and sales of the vehicles on their lot. Credit approval standards tend to be lower, and the process is much quicker than traditional loans. But the interest rates are high and there are fewer vehicles readily available. Auto loans that are joint loans A joint auto loan is the case when you and a third party — usually a spouse or spouse — are both liable for equal responsibility for the car loan. The lender will take into consideration both income and credit scores when making an approval decision. A joint application can also result in a lower interest rate as well as the chance to accept an additional loan because of the increased income. A co-signed car loan An auto loan will mean that you carry the full responsibility of the monthly payments but have another person backing your loan. Similar to a joint auto loan, both your credit history as well as the co-signer’s credit history are considered when you apply. This will increase your chances of approval, and could mean more and better terms. The main thing to remember is that if you’ve been denied, you should take an extra step. Your lender will need to provide a written statement that explains the reason for your rejection. Similar to everything that involves finance, preparation is crucial. The next time you make an application to a lender, research the situation, keep an eye on your credit score and lower your total debt ahead of time. This will help ensure your application is as perfect as it can be when you present it to an lender. Find out more


Written by Business and personal financial contributor Kellye Guinan is a freelance editor and writer with more than five years ‘ experience within personal financial planning. She is also an employee full-time at her local library, helping people in her community get information about financial literacy, in addition to other subjects. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to take control of their finances by providing precise, well-researched and well-organized facts that break down otherwise complex topics into manageable bites.

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