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What to do if your car loan application was rejected

What to do if your car loan application was rejected

If you recently applied for a car loan and it was rejected, you might feel like there are no options available.

While, in the past, your car loan options were limited, that is no longer the case.

Our goal is to show you all of the steps that are involved with getting a car loan, even if you were rejected in the past, so be sure to stick around with us until the end of this conversation.

Understanding why your car loan application was rejected in the first place

The first thing you need to do is understand why your car loan was rejected.

Lenders are worried about lawsuits, so they will never give you a precise reason but will say something vague like, based on information provided in your credit report, they are not able to approve your car loan at this time.

Each lender has its own unique car loan underwriting requirements, but the primary reason your application was that your credit score was not high enough.

During the pandemic, you could get a decent car loan with a 600-credit score, but since the Bank of Canada has been actively and aggressively increasing interest rates, you need a credit score of 650 or higher if you want to lock in a competitive deal.

Addressing other potential reasons why your car loan application was rejected

You could have a high credit score, but the loan application was rejected because your debt-to-income ratio (DTI) was over forty percent (40%).

The majority of economists in Canada are predicting a recession due to the rising interest rates; this is all but guaranteed. Lenders are worried about taking on non-performing loans, so they are reluctant to issue new loans to borrowers with a high debt-to-income ratio.

If you are on the fringe or carrying too much debt, then you should take this opportunity to do everything you can to start bringing down the total amount of debt you are carrying.

How to boost your income quickly

If you are already working one job and need to increase your income to qualify for a new car loan, you should consider taking on a side-line job.

The Canadian economy is transitioning to a “gig economy,” so you could pick up some extra money by purchasing a new car and using it to make deliveries as a Door Dash driver or ferrying people around by joining Uber.

Where to turn for help after getting rejected for a car loan

There is a growing number of public and private lenders that are offering car loans.

To locate these lenders who are willing to give you a chance, you have to reach out to your local car dealership right away.

These local dealerships will have an extensive network of lenders they currently work with, so you should be able to find someone willing to offer you a loan, even if your credit is less than ideal.

The same dealership also has cars available in its inventory that you can test drive right now and drive home today.

Contact Unique Chrysler for help, advice and competitive car finance and leasing.

Categories: Auto Loan

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