You’ve been denied the auto loan? Here’s everything you need to know Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by providing you with interactive financial calculators and tools as well as publishing original and impartial content. We also allow users to conduct research and compare information for free to help you make sound financial decisions. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn money The products that appear on this site are from companies that compensate us. This compensation can affect the way and where products are displayed on this website, for example, for example, the order in which they appear in the listing categories and other categories, unless prohibited by law. This applies to our mortgage home equity, mortgage and other home lending products. This compensation, however, does have no impact on the information we publish, or the reviews you see on this site. We do not include the vast array of companies or financial offerings that might be available to you. yourstockbank/Getty Images

4 min read Published October 12, 2022

Writer: Kellye Guinan. Written personal and business finance Contributor Kellye Guinan is an editor and writer on a freelance basis with over five years of experience in personal financial planning. She also is an employee full-time at her local library where she helps the community to access information about financial literacy, among other topics. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are dedicated to helping their readers feel confident to control their finances by providing precise, well-researched and well-researched data that breaks down complicated topics into manageable bites. The Bankrate guarantee

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We make sure that everything we publish ensures that everything we publish is accurate, objective and trustworthy. The loans journalists and editors focus on the areas that consumers are concerned about the most — the various types of loans available, the best rates, the most reliable lenders, ways to pay off debt and more — so you’ll be able to feel secure when investing your money. Integrity of the editing

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If you have questions about money. Bankrate has answers. Our experts have been helping you manage your money for over four years. We are constantly striving to provide consumers with the expert guidance and the tools necessary to succeed throughout life’s financial journey. Bankrate adheres to a strict code of conduct policy, which means you can be confident that our content is honest and reliable. Our award-winning editors and journalists provide honest and trustworthy information to assist you in making the best financial decisions. Our content produced by our editorial team is objective, truthful, and not influenced from our advertising. We’re honest about how we are capable of bringing high-quality content, competitive rates and useful tools to you by explaining how we earn money. is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products andservices or by you clicking on certain hyperlinks on our site. This compensation could affect the way, location and in what order products appear within listing categories in the event that they are not permitted by law. We also offer mortgage, home equity and other home loan products. Other factors, like our own website rules and whether the product is available within your region or within your own personal credit score can also impact how and where products appear on this website. While we strive to provide the most diverse selection of products, Bankrate does not include details about every credit or financial product or service. A car loan application could be rejected due to your credit score or your current financial status. But by reaching out to your lender and improving your finances, you can work on creating an application that will not be denied in the future. Why did I get not able to get a car loan? The majority of lenders reject applicants because of credit score or credit history, as well as overall debt. Errors in the application You can be denied a loan due to simple errors on the application. If you have missed a part or note information incorrectly the lender could reject your application without giving you the opportunity to amend inaccurate data. Make sure you review every aspect of your application to ensure you are in complete compliance. It is possible to reapply again however, being precise the first time around will help you save time. Poor credit score Most lenders have an upper limit on credit scores in order to meet their criteria for eligibility. In general, lenders need that you have fair credit- a score of 620 or more. In the event that your score falls less than this requirement then you’ll be immediately refused. There are . However, these are more expensive in the long run , and could have higher feesfor example, origination fees or prepayment penalties — than standard auto loans. Poor credit history: If you have weak or no credit history, lenders will not be able to assess your ability to make the future auto loan repayments. They might use it as a reason to reject your application. However, it’s going to take time to rectify this. It is necessary to take on additional smaller, less hefty debts to build your credit history before you apply again, or apply with a co-signer. In the event of a large amount of debt, if you have a lot of debt from other loans and credit card in the meantime, your DTI ratio — or debt-to-income ratio will be higher. An DTI proportion of 50% percent or higher is considered to be a signal of danger and can cause rejection. Paying down your credit card debt is the best method to lower your DTI however, if you’re able, a second source of income could lower your DTI. What to do if you were refused an auto loan A rejection isn’t the end of the world. Do a few things before applying for a loan again to increase your chances of being approved. Get in touch with your lender Lenders are required to give you the specific reasons the application was rejected. If it isn’t automatically sent, request to receive it in the 60-day period following the date of your application. Otherwise, it will fall out of the Equal Credit Opportunity Act. If it was as minor as an application mistake, you are able to make changes and apply again. If the reason was you’re credit score, or other financial obligations, you are able to improve them prior to applying again. Improve credit score Credit score among the most important factors that lenders look at when they consider granting you a loan. Take the time to by checking your credit report, paying your bills on time and improving your ratio for credit utilization. It will take several months. If you’re in a rush, consider other options while you work on improving your credit score. However, once you’ve earned an impressive repayment record the lenders will consider you as less risky. Reduce your debt. Lowering your debt is key to being able to attract the attention of future lenders. You should focus on paying your current debts and making sure to avoid any new loans and credit card purchases. Review your budget and try to eliminate any unnecessary expenditures before reapplying. is also an excellent way to minimize your debt-to-income ratio (DTI) which lenders employ to determine if you can comfortably afford the new loan to pay. Look for poor credit lenders There are lenders that take . This could be a method to get you on the road sooner instead of later. The lenders target drivers with low credit scores. However, you must be aware of the options as auto loans for those with bad credit tend to have much higher interest rates that could cost you thousands in the long run. Other options Your choices don’t necessarily depend on the ability of you to swiftly improve your credit and lower the amount of debt you have — although they can both be beneficial. “Buy here pay here” dealers A BHPH dealership isn’t the perfect choice, but it can be an alternative if you have poor credit and are in desperate need of a vehicle. BHPH dealerships both offer financing and sales of the vehicles that they have on their premises. Credit approval standards tend to be lower, as well as the procedure is quicker than traditional loans. However, interest rates are high and there are fewer vehicles readily available. Joint auto loans An auto loan is where you and someone else usually a partner or spouse — share the same responsibility for an auto loan. The lender will take into consideration both income and credit scores in deciding whether to approve. Joint applications can lead to a lower interest rate and the possibility to obtain an additional loan because of the increased income. Auto loan co-signed loan Co-signed car loan will mean that you still carry the full responsibility of the monthly payments but have another person supporting the loan. Like with the joint auto loan, both your credit history and your co-signer’s credit score will be factored in when you apply. This can increase the chances of approval, and could mean more and better terms. In the end, if you’ve been denied, take an extra step. Your lender will need to provide a written statement explaining the reason you were denied. Like everything else that involves financial matters, being prepared is essential. When you next apply make sure you do your homework be aware of your credit score, and reduce your overall debt prior to time. This will help ensure your application is the best it can be before you send it to an lender. Learn more


Written by Business and personal Finance Contributor Kellye Guinan is a freelance editor and writer with more than five years of experience in personal financial. She is also employed full-time at the local library, helping people in her community get information about financial literacy, in addition to other topics. 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 committed to helping readers gain confidence to control their finances by providing precise, well-researched and well-organized facts that break down complicated topics into digestible pieces.

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