Yeah that’s a tough one. The question everyone asks themselves after they get told yet again they were Not Get Approved for a Car Loan.
There a lot of things that could hurt your credit which can result in declination:
Knowing when to apply for credit is crucial as the old quote “timing is everything” applies perfectly.
If you transitioning into a new job, still on probation, about going on maternity leave, or taking less hours, then the timing is not the best to apply for a car loan.
2. Credit Report
Before applying for a car loan be sure to obtain a copy of your credit report to review and fix errors that could impact your chances of getting approved. Hate to break to you but sometimes the bureaus handling credit information make mistakes: a payment you made which still shows as a missed payment is a common so make sure to check for errors such as that.
3. Incomplete or missing documents
Lenders require to see a series of documents before you are approved for a loan; like pay stubs, drivers’ license, bank statements, and more. If one or more of these pieces of information is not submitted or is submitted wrongly, the lenders cannot process your application
4. Type of Income
In general lenders approve or decline loan applications based on your income. Their aim is to observe patterns and probabilities as certain jobs or payment structures and methods can predict if an individual is more or less likely to make payments on their trade lines and on time.
If you work for tips consider developing a pattern where you deposit the tips into your bank account so it can serve as proof of income. Keep in mind that applying for a loan with unverified employment, be it as a result of being paid cash or declaring less on your tax return will result in denial as the lenders cannot verify that income.
5. Know your budget
Know what you can comfortably afford in terms of monthly payments and your income. If for instance Paul wants a 2018 Mercedes Benz C-Class that costs $98,000 and he’s a cashier at Sobey’s making $2200 monthly before taxes, it’s safe to say his imagination is running too wild. This applies for individuals with good credit as well; if your choice of car is high end, you need to have a high income monthly to have a chance at being approved.
6. Using the right source
If you are an individual with less than ideal credit, bad credit, no credit, or rebuilding your credit after a major event such as bankruptcy or consumer proposal; going through the right channel to obtain a vehicle loan would not only result in increased chances of being approved but also see you get financing with the lowest possible interest rate.