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Denied an auto loan? Here’s everything you need to know Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by offering interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct your own research and analyze data for free and help you make financial decisions with confidence. Bankrate has agreements with issuers, including but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site are from companies that compensate us. This compensation can affect the way and when products are featured on this website, for example, for example, the sequence in which they appear within the listing categories in the event that they are not permitted by law. Our mortgage home equity, mortgage and other home lending products. But this compensation does not influence the information we provide, or the reviews that you read on this site. We do not cover the universe of companies or financial offers that may be available to you. yourstockbank/Getty Images

4 min read. Published October 12, 2022

Kellye Guinan Kellye Guinan. Written by Personal and business finance writer Kellye Guinan is a freelance editor and writer with more than five years’ experience in personal financial planning. She also is an employee full-time at her local library where she helps people in her community gain access to information on financial literacy, as well as other topics. Edited 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 to manage their finances by providing concise, well-studied information that breaks down otherwise complex issues into digestible chunks. The Bankrate promise

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In 1976, Bankrate was founded. Bankrate has a long experience of helping customers make informed financial decisions.

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They ensure that what we write ensures that everything we publish is accurate, objective and reliable. We have loans journalists and editors focus on the points consumers care about most — the various types of loans available as well as the best rates, the best lenders, how to pay off debt and more — so you’re able to be confident about investing your money. Integrity of the editing

Bankrate follows a strict and rigorous policy, so you can rest assured that we’re putting your interests first. Our award-winning editors, reporters and editors produce honest and reliable information to aid you in making the best financial choices. The key principles We appreciate your trust. Our aim is to provide readers with accurate and unbiased information, and we have established editorial standards to ensure this happens. Our editors and reporters rigorously check the accuracy of editorial content to ensure that what you read is true. We keep a barrier between advertisers as well as our editorial staff. Our editorial team does not receive compensation directly through our sponsors. Editorial Independence Bankrate’s team of editors writes for YOU the reader. Our goal is to give you the most accurate advice to aid you in making informed financial choices for your own personal finances. We adhere to strict guidelines in order to ensure that our editorial content isn’t affected by advertisements. Our editorial team is not paid direct compensation from advertisers, and our content is thoroughly checked for accuracy to ensure its truthfulness. So whether you’re reading an article or a review you can be sure that you’re getting credible and dependable information. How we make money

You have money questions. Bankrate can help. Our experts have helped you understand your money for over four decades. We continually strive to provide consumers with the expert guidance and the tools necessary to make it through life’s financial journey. Bankrate adheres to a strict code of conduct , so you can trust that our information is trustworthy and precise. Our award-winning editors and reporters create honest and accurate information to assist you in making the right financial decisions. The content created by our editorial team is factual, objective, and not influenced by our advertisers. We’re open about the ways we’re in a position to provide quality content, competitive rates and useful tools to you by explaining how we earn money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for placement of sponsored products andservices or when you click on specific links on our website. Therefore, this compensation may impact how, where and in what order items are listed in the event that they are not permitted by law. This is the case for our loan products, such as mortgages and home equity, and other home lending products. Other elements, like our own website rules and whether a product is available within the area you reside in or is within your own personal credit score can also impact how and where products appear on this site. Although we try to offer an array of offers, Bankrate does not include specific information on each credit or financial products or services. A car loan application could be rejected because of your credit history or financial circumstances. However, by contacting your lender and reorganizing your finances and establishing a plan for making an application that won’t be denied in the future. Why was I refused a car loan? Most lenders deny applicants because of credit score credit history, credit history and overall debt. There are mistakes in the application. You may be refused a loan because of simple mistakes in the application. If you do not complete a section or write incorrect information lenders could deny you without giving you a chance to correct inaccurate information. Always review each detail on your application to ensure you have everything correct. It is possible to apply again however, being precise the first time will help you save time. Low credit score Many lenders require minimum credit scores to satisfy their eligibility criteria. The majority of lenders need for fair credit -which is scores of 620 or more. If you have a credit score less than this requirement, you will immediately be rejected. There are . But these will cost more over the long term and might have higher costs — like origination fees or prepayment penalties that are higher than traditional auto loans. A poor credit history If you have limited or no credit history, lenders won’t be able to assess your ability to pay for the future auto loan payments. They may use it as a reason to reject your application. However, it’s going to take time to amend this. It is necessary to take on other smaller debts in order to build your credit score before applying for another loan, or with a co-signer. Large amount of debt If you’re carrying a large amount of debt gathered from various loans as well as credit cards and credit cards, your DTI ratio, also known as the ratio of debt to income will be higher. A DTI proportion of 50% percent or more is a red flag and may result in rejection. The process of paying down debts is the most effective way to lower your DTI however, if you’re capable, another source of income could reduce your DTI. What to do if you were refused an auto loan A rejection isn’t an end in itself. Consider a few steps prior to applying again to boost the chances of getting approved. Contact your lender Lenders are required to provide you with the exact reasons the application was rejected. If your application was not automatically processed you can request it within 60 days of your application. If not, it falls outside of the Equal Credit Opportunity Act. If it was as minor as an application error, you are able to make changes and then apply again. If the issue was due to the credit rating or other debts, you can make improvements prior to submitting another application. Improve your credit score. Your credit score is among the main factors lenders consider when they consider granting you a loan. Be sure to spend time looking over your credit score, paying your bills on time and improving the ratio of your debt to credit. This will take a few months. If you’re trying to get a loan in a hurry take a look at other options as you work on improving your credit score. But once you’ve built up a solid recent repayment history the lenders will consider you as less of a risk. Reduce your debt. Lowering your debt is a crucial factor in getting the attention of future lenders. The focus should be on paying down your current debts while making sure to avoid any new loans as well as credit cards. Examine your budget and make an effort to remove any unnecessary expenses before applying again. This is also a good option to lower your debt-to income ratio (DTI) which lenders employ to determine if you have enough money to comfortably afford an additional loan to pay. Find lenders with poor credit scores. There are lenders who take . This may be a means to be able to get behind the wheel sooner rather than later. The lenders target people 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 more expensive interest rates which could cost you thousands over the long run. Other alternatives Your options don’t depend on your ability to improve your credit score or reduce your debt — though both can certainly help. “Buy here, pay here” dealers BHPH dealership isn’t ideal, but it could be a good alternative if you have a low credit score and are looking for an automobile. BHPH dealerships offer financing and sales of the vehicles on their lots. Approval standards for credit are generally lower as well as the procedure is faster than traditional lending. However, interest rates are high and there are not many automobiles available. The joint auto loans A joint auto loan is where you and someone else — typically a partner or spouse — share the responsibility for a car loan. The lender will look at both incomes and credit scores when making an approval decision. A joint application could lead to a lower interest rate as well as the chance to take on an additional loan due to the additional income. Co-signed auto loan Co-signed car loan will mean that you carry the full responsibility of your monthly payments, but you have someone else backing the loan. As with co-signed auto loan the credit history and your co-signer’s credit history are considered when applying for the loan. This increases your chance of approval, which could translate into more and terms. The main thing to remember is that if you’ve been denied, take a step back. Your lender should provide a letter explaining the reason you were denied. As with anything that involves finance, preparedness is key. The next time you make an application make sure you do your homework and keep an eye on your credit score and decrease the total amount of debt you have before time. This will ensure that your application is as perfect as it can be before you send it to an lender. Learn more

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Written by Business and personal finance Contributor Kellye Guinan is a freelance editor and writer with over 5 years experience working in the field of personal finance. She is also employed full-time at the local library, helping people in her community get information about financial literacy, among other subjects. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are committed to helping readers gain confidence to manage their finances by providing precise, well-researched and well-organized details that cut complex subjects into bite-sized pieces.

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