If you've got your heart set on your dream car, you may feel nervous about the final step of financing. Just why do car loans get denied? It all comes down to the auto loan lenders and your personal financial information. While this may feel like an overwhelming process, the good news is that a little research goes a long way in your success. Learn all about the common reasons for rejection, and don't forget to consider Cashmax for our personal loan services.
Do you know your credit score? If not, be sure to check your score annually through any of the free online resources available. Auto loan lenders prefer drivers with scores of 620 or higher, because they are seen as low-risk clients. Drivers with lower credit scores can be considered risky, and thus, they are frequently rejected.
So, poor credit can be a major liability in the financing process. What about no credit? This can also be a problem, since auto loan lenders cannot determine whether you are a low- or high-risk client. There are a few ways to work around this issue. First, consider a co-signer who has a good credit score to boost your favorability. Second, you can consider online lenders. However, keep in mind that online lenders have lower requirements and much higher interest costs. It's up to you whether that trade-off is worthwhile.
It's important to double check and triple check your paperwork before you hand it in. While it may seem silly, you may be surprised how many applications are rejected due to paperwork issues. If you forget key categories like your proof of income or personal information, your lenders may get suspicious. Answer all the questions honestly and thoroughly to prevent any mishaps!
Finally, each lender has their own set of criteria. As we mentioned earlier, online lenders may be more lenient, but they also require higher interest rates. Sources like banks and credit unions are far more selective, but the right candidate can get the best deal on average. No matter which lender you pick, be sure to read over the terms of the loan carefully, so you can drive off with complete confidence.