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yourstockbank/Getty Images October 12, 2022 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 clear, well-researched information that breaks down otherwise complex topics into manageable bites. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. An auto loan application may be rejected because of your credit history or current financial situation. But by reaching out to your lender and improving your finances, you can work on building an application that won’t be denied in the future. Why was I denied a car loan
Lenders frequently reject applicants because of credit score, credit history and overall debt. Errors in the application
You can be denied a loan due to simple errors in the application. If you miss a section or note information incorrectly, lenders may reject you without giving you the chance to update inaccurate details. Always review each detail on your application to ensure you have everything correct. You may be able to reapply again, but accuracy the first time around will save you time. Poor credit score
Most lenders have a minimum credit score as part of their eligibility criteria. In general, lenders want to see fair credit — a score of 620 or higher. If your credit score is lower than this requirement, you will immediately be denied. There are . But these will cost more in the long run and may have more fees — like origination fees or prepayment penalties — than standard auto loans. Limited credit history
If you have limited or no credit history, lenders will not be able to gauge your ability to make future auto loan payments. They may use it as a reason to deny your application. Unfortunately, it will take time to amend this. You will need to take on other, smaller debts to build your credit history before you apply again, or apply with a co-signer. Large amount of debt
If you have a lot of debt gathered from other loans or credit cards, your DTI ratio — or — will be higher. A DTI ratio of 50 percent or higher is considered a red flag and may lead to rejection. Paying down your debts is the best way to lower your DTI, but if you’re able, a second source of income can also lower your DTI. What to do if you were denied an auto loan
One rejection isn’t the end of the world. Take a few steps before applying again to boost your chances of being approved. Contact your lender
Lenders are required to give you the specific reasons your application was denied. If it isn’t automatically sent, request it within 60 days of your application. Otherwise, it will fall outside of the Equal Credit Opportunity Act. If it was something as simple as an application error, you can make adjustments and reapply. If the reason was your credit score or other debts, you can work on improving them before you apply again. Improve credit score
Your credit score is one of the main factors lenders consider when you apply. Take the time to by checking your credit report, paying your debts on time and lowering your credit utilization ratio. This will take a few months. If you’re in a rush, consider other options while you work on your score. But once you’ve built up a solid recent repayment history, lenders will see you as less of a risk. Minimize your debt
Lowering your debt is key to attracting future lenders. You should focus on paying down your current debts while also avoiding new loans or credit cards. Review your budget and try to remove any unnecessary expenses before reapplying. is also an excellent way to minimize your debt-to-income ratio (DTI), which lenders use to determine if you have enough money to comfortably afford a new loan payment. Look for poor credit lenders
There are lenders that accept . This might be a way to get you behind the wheel sooner rather than later. These lenders market specifically to drivers with low credit scores. However, compare options carefully — auto loans for bad credit tend to have much higher interest rates that could cost you thousands in the long term. Other options
Your choices don’t depend on your ability to quickly improve your credit and lower your debt — though both can certainly help. Buy here pay here dealers
A BHPH dealership is not perfect, but it can be a good option if you have a low credit score and are desperate for a vehicle. BHPH dealerships both sell and finance the vehicles on their lots. Approval standards for credit tend to be lower, and the process is much quicker than traditional lending. But interest rates are very high and there are fewer vehicles available. Joint auto loans
A joint auto loan is when you and someone else — typically a partner or spouse — share equal responsibility for a car loan. The lender will consider both incomes and credit scores when making an approval decision. A joint application can also lead to a lower interest rate and the ability to take on a larger loan because of the added income. Co-signed auto loan
A co-signed auto loan is when you still carry the full responsibility of the monthly payments but have someone else backing your loan. Like with a joint auto loan, both your credit history and your co-signer’s credit history will be factored in during the application process. This increases your chance of approval and may mean more and terms. The bottom line
If you’ve been denied, take a step back. Your lender should provide a letter stating why you were rejected. As with anything in the realm of finance, preparedness is key. Next time you apply, do your research, keep an eye on your credit score and lower your total debt ahead of time. This will help ensure your application is the best it can be when you submit it to a lender. Learn more
SHARE: 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 clear, well-researched information that breaks down otherwise complex topics into manageable bites. Related Articles