Auto lenders do not just look at your credit score and history when evaluating your loan application. They also look at a few more things. It means that there are also several possible reasons why you can be denied an auto loan. Let’s take a look at some:
1) Low Credit Score
Not all auto lenders are the same in terms of requirements. Although some accept applications from people with less-than-perfect credit, it is still possible to get rejected because of a too low credit score. Here is a list of some negative information that lowers your credit score and deteriorates your overall credit standing:
- open lawsuit
- charge-offs and collections
- hard credit inquiries
What to Do: Get a copy of your credit report beforehand and take note of the negative information, if any. We recommend improving your credit before applying for a car loan to increase your chances of getting approved.
2) False Information
Lenders verify the details you put in your application. And when they find out that the details are fudged or cannot be verified at all, they will reject the application. The same goes here in New York Auto Approval Center.
What to Do: Make sure you completely fill out the application form with accurate, authentic and honest information about you. Otherwise, you may not get an auto loan even if your credit qualifies.
3) Too Expensive Vehicle
The maximum loan amount a borrower can request varies from lender to lender. But generally, you might be denied an auto loan if your car choice is unrealistic. For example, a bad credit or a low income and a new car worth $50,000 waiting to be financed will not convince lenders to grant you a loan. In this case, you can only get approved if you resort to a cheaper vehicle. Keep in mind that lenders are also businessmen and they calculate risk very well. They have to first make sure you can repay the loan before they approve your application.
What to Do: Consider buying a used car when you have bad credit.
4) Insufficient Employment History
Aside from your credit score and history, lenders also look at your employment stability. They want to make sure that you are not likely to be laid off or quit your job any time soon so that your loan payments won’t be affected. Other things like resigning from your previous work just before applying for an auto loan may also cause your application to be rejected.
What to Do: To ensure approval, you should be working in the same company for at least 2 years before applying for an auto loan. But again, lenders may slightly vary in this particular requirement.
Remember that lenders can have various reasons for not approving your auto loan application. More than your credit or income itself, lenders are concerned about how much risk they would take on by financing your vehicle. If they calculated more risk than what they can shoulder, they would almost automatically deny you a loan. To reduce that risk, keep the things discussed above in mind.