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What to do after your Car Loan is Rejected in Kitchener

What to do after your Car Loan is Rejected in Kitchener

If you recently applied for a car loan with your local bank, but they declined the application, you would naturally feel depressed. While one lender has rejected you, it does not mean that your dreams of buying a car are over.

 

Our Kitchener car loans team are going to show you how to find alternative forms of car financing after your car loan is rejected, but you will need to pay attention to these tips if you want to be successful.

 

Credit scores and subprime car loans in Kitchener

 

Banks historically have some of the most conservative credit underwriting requirements. If you do not meet their stringent credit score and income verification requirements, your application would be automatically declined.

 

Since the Canadian financial service sector has experienced deregulation, there is a plethora of different lenders that provide loans to consumers that don’t fit the banks “one size fits all” model.

 

Credit score fundamentals

 

There are two main credit reporting agencies in Canada, TransUnion and Equifax. These agencies use their own unique credit scoring models which ranges from 300-800, the average Canadian has a credit score in the 660 range.

 

You can access your credit report and score for free, but you will need to pass an identification verification process.

 

If your credit score is in the 620-679 range, you are not considered prime nor subprime, but somewhere in the middle. There are some simple things you can do to help raise your credit score.

 

One way to raise your credit score and save money is by paying down any debts you are carrying. Carrying too much debt will weigh down your credit score and the added interest will really take a bite out of your income.

 

While having a good credit score can help you save money on borrowing costs, your income is what will make or break a deal. Lenders want to know whether you are bringing in enough stable income to service all of your current debts plus the car loan.

 

What lenders do is take your total monthly income and multiply it by 35%-40%, this represents your maximum debt-to-income ratio. If your total debts plus new car loan exceeds this amount, then the loan will not be approved. By having a large income that can be verified, your odds of getting a car loan approved will increase dramatically.

 

How to find the right car loan provider

 

There are many car loan providers in Canada, but you want to find the one that is going to take their time to get to know you.

 

You cannot find these lenders online, the only way that you can find lenders who give borrowers like you a second chance is by going through a local car dealership. The dealerships have existing relationships with all of the lenders throughout Canada, so you will have no problems finding a great car loan.

 

Another reason to work with a local car dealership is their ability to give you expert credit advice, if you follow the suggestions that are provided your credit will rise.

 

Don’t let the rejection from the bank get you down, you can get a new car but you need to reach out to a local car dealership today.

 

When you’re ready for a car lease or loan, get in touch with the Kitchener auto loan experts at Northway Ford for great deals on auto finance.

 

For any questions, concerns, or inquiries. Please don’t hesitate to contact us here! 

 

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    Categories: Car Loan

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