There are several factors that could possibly cause you to be denied for auto financing; the good news though, is you can often correct these issues.
We would love to promise every person that completes our easy online application that they will definitely get into the vehicle of their dreams.
However, in reality, we choose to be honest. Despite being able to help so many people find auto financing, still 1 out of 5 people that applied with us had problems holding them back from the car they needed.
Most Common Reasons for Denial
Having been in the business for almost two decades now, we have definitely picked up on some trends that are usually the culprits for a denial from the dealer. Here's a few:
- Low Income
Nearly every dealer will have a threshold that you must meet income wise for them to be able to help you. And that income needs to be garnishable in case you stop paying your loan. While we help people find low income auto loans where we can, it remains a big reason for denial.
- Lack of Job Time
Dealers and lenders alike will want to know that you've had a steady stream of income so far and are able to keep hold of a job for a good length of time. Typically, dealers will be looking for a job time of at least six months, or will be looking at your total recent work history to be sure you hold a steady job.
- High Debt-to-Income Ratio
When you meet with the dealer, they will not only look at your application and credit report, but also your current debt. If you already have a high level of debt leaving little of your income free, a dealer may not feel comfortable helping you add to your debt.
- Multiple Bankruptcies
If you have several bankruptcies listed in your credit report, a dealer is highly unlikely to want to do business with you. This is pretty unanimous amongst dealers and lenders.
- Recent Repossession
If you've had repossession within the past year not related to a bankruptcy, dealers will often deny you in fear that you may be a repeating offender.
Time is the Remedy
Are you ready for some good news now? I thought so. Here it is: nearly every one of these reasons for denial can be fixed with simply a little time.
More time on your job will strengthen your application and give the dealer and lender more reasons to be confident in you as a customer. And who knows? It could lead to a pay raise when the time comes to reapply, making it easier to afford a vehicle.
As you pay off more debt over time, your ratio should lower. An increase in your income may also help lower your debt to income ratio too.
For multiple bankruptcies you'll need to wait to have one or two fall off. This will certainly take some time depending on when you filed. If you need a car now, there may be other auto financing opportunities to look at, such as car lots that finance anyone.
Even a repossession can be handled with some extra time. Usually, a dealer and lender will want to see it's been at least a year or more since you've lost your previous vehicle.
Second Chance At Auto Financing
Even if you think that something may cause a denial on your application, it's important to just get it out in the open. When you meet with a dealer, they'll look over your credit report and see these things already. By being up front though, you can often find out how far they are able to go to help you from the get go.
Our national network of dealers and lenders specifically work with customers that have had a troubling credit past. It's nothing to be ashamed about because you're not alone. Be honest and open to opportunities that will get you into the vehicle you need.