388 King George Rd, Brantford, ON, N3T 5L8
My Garage

Most common reasons why your car loan application was declined

Most common reasons why your car loan application was declined

If you recently applied for a car loan and it was declined, you are not alone. Car loan providers in Canada and throughout North America have started to tighten up their loan underwriting process.

This means that borrowers who would have been approved for a new car loan in the past are now being declined.

Lenders will not tell you the exact reason why your loan was declined; they will allude to either your income or credit score not meeting its underwriting requirements.

Since the lenders aren’t going to be transparent, we have taken it upon ourselves to show you the way car loans work and the most common reasons the loan application was declined in the first place.

It’s nothing personal

In the past, when you filled out a car loan application, it would go to an actual person who would look at you as a person and your financial situation before making a decision.

There has been a paradigm shift in the way car loans are assessed, thanks in part to technology.

When you fill out a car loan application now, it doesn’t get seen by a human unless you are on the fringes of qualifying for a car loan.

Lenders now rely primarily on software to make instant decisions on whether to approve a loan.

This may seem cold, but it helps lenders streamline their operations and reduce costs.

The software makes an impersonal determination based on the information it can gather about you.

You are nothing more than a series of numbers inside a complex calculation that looks at your credit score, whether you are self-employed or employed, and your income.

If you don’t check all of the pre-determined boxes, your application is rejected without a second thought.

This is why you should never take a car loan rejection to heart; no one has ever seen your application, to begin with.

Cleaning up your credit score to qualify for the best car loans

If you want to access the best car loans in Canada, the single most important thing you can do is work on your credit score.

If you did a search online, you would be inundated with credit repair hacks and programs that will help you raise your credit score for a modest fee.

Don’t bother with those programs; they are a complete waste of time and money.

If you want your credit score to improve, all you need to do is make your payments on time and reduce the total amount of debt you are carrying; that is the big secret to a high credit score.

It takes time to have a high credit score but now that you know why your car loan was declined and what steps you need to take to deal with that issue, check out your credit report for free right now and get to work on it.

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

Categories: Car Loan

Tags: ,