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Are you denied to get an auto loan? Here’s everything you need to know Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content. We also allow users to conduct research and analyze data for free and help you make informed financial decisions. Bankrate has agreements with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this site come from companies that pay us. This compensation may impact how and where products are displayed on this website, for example for instance, the order in which they may be listed within the categories of listing in the event that they are not permitted by law. This applies to our mortgage, home equity and other home loan products. This compensation, however, does affect the information we publish, or the reviews you read on this site. We do not include the vast array of companies or financial deals that could be available to you. yourstockbank/Getty Images

4 min read. Published 12 October 2022

Written by Kellye Guinan. Written by Personal and Business Finance writer Kellye Guinan is a freelance editor and writer with more than five years of experience in personal financial planning. She is also a full-time worker at her local library, where she assists people in her community gain access to information on financial literacy, among other subjects. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers to control their finances by providing precise, well-researched and well-researched data that breaks down otherwise complex topics into manageable bites. The Bankrate promises

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They ensure that what we write will ensure that our content is reliable, honest and reliable. We have loans reporter and editor focus on the areas that consumers are concerned about most — the various types of loans available, the best rates, the most reliable lenders, how to repay debt, and much more. So you can feel confident when making a decision about your investment. Integrity of the editing

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You have money questions. Bankrate has answers. Our experts have been helping you manage your finances for more than four years. We continually strive to provide our readers with the professional advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and reliable. Our award-winning editors and journalists produce honest and reliable content to help you make the right financial decisions. Our content produced by our editorial staff is objective, factual and is not influenced by our advertisers. We’re open about the ways we’re in a position to provide quality content, competitive rates, and useful tools for you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods or services, or through you clicking certain hyperlinks on our website. This compensation could influence the manner, place and when products are displayed within the categories of listing and categories, unless it is prohibited by law. We also offer mortgage, home equity and other home lending products. Other factors, like our own rules for our website and whether or not a product is available in your area or at your own personal credit score may also influence the manner in which products are featured on this site. While we strive to provide a wide range offers, Bankrate does not include specific information on each credit or financial product or service. A car loan application might be denied due to your credit history or financial circumstances. But by reaching out to your lender and improving your finances it is possible to work on building an application that won’t be denied in the future. What caused me to be denied an auto loan? Lenders frequently reject applicants due to credit scores credit history, credit history and overall debt. There are mistakes in the application. You could be denied an loan due to simple errors in the application. If you have missed a part or note information incorrectly the lender could reject your application without giving you the chance to amend inaccurate data. Make sure you review every aspect of your application to make sure you have all the information you need. It is possible to apply again with the same information, but being accurate the first time can save you time. Poor credit score Most lenders have a minimum credit score as part of their eligibility criteria. The majority of lenders need that you have fair credit -that is, at least 620 points or higher. In the event that your score falls lower than this requirement, you will immediately be denied. There are . But these will cost more in the long run and may have more fees — like origination fees or prepayment penalties as opposed to standard auto loans. Limited credit history If you have limited or no credit history, lenders won’t be able to assess your capacity to pay future auto loan installments. They may use it as a reason to deny your application. It will take time to amend this. You will need to take on other, smaller debts to build your credit history prior to applying again or apply with a cosigner. A large amount of debt If you have a lot of debt that you have accumulated through different loans as well as credit cards in the meantime, your DTI ratio — also known as debt-to-income ratio will be greater. A DTI percentage of fifty percent or higher is considered to be a red flag and may result in rejection. Repaying your debts is the most effective way to reduce your DTI, but if you’re capable, another source of income can also help lower your DTI. What should you do if have been denied an auto loan The rejection doesn’t mean the end of the world. Take a few steps before applying for a loan again to increase the chances of getting approved. Make contact with the lender Lenders are required to give you the specific reasons your application was not approved. If your application was not automatically processed you can request the information within 60 days after your application. Otherwise, it will fall beyond the Equal Credit Opportunity Act. If the cause was as easy as an application mistake, you may make corrections and reapply. If the issue was due to you’re credit score, or other debts, you could work on improving them before you apply again. Improve credit score Credit score among the primary factors considered by lenders when you apply. Take the time to by reviewing your credit report and making sure you pay your debts on time , and lowering your credit utilization ratio. This can take a few months. If you’re in a rush take a look at other options as you work on your score. However, once you’ve earned an excellent repayment history and have a good credit score, lenders will view you as less of a risk. Reduce your debt. Lowering your debt is the key to getting prospective lenders. It is important to pay down your current debts while also avoiding new loans and credit card purchases. Review your budget and try to remove any unnecessary expenses before reapplying. is also an excellent option to lower your debt-to income ratio (DTI), which lenders employ to determine if you can be able to afford the new loan to pay. Look for poor credit lenders There are lenders who will accept . This could be a method to get you on the road sooner instead of later. These lenders market specifically to those with poor credit scores. But, be sure to compare your options — auto loans for those with bad credit tend to have much higher interest rates that could cost you thousands in the long term. Other options Your choices don’t hinge on how you can swiftly improve your credit and lower the amount of debt you have — although both can certainly help. “Buy here pay here” dealers BHPH dealership is not ideal, but it could be an option if you have a low credit score and are desperate for a vehicle. BHPH dealerships both offer financing and sales of the vehicles on their lot. The standards for approval of credit are generally lower and the process is faster than traditional lending. But interest rates are very high, and there are less cars readily available. The joint auto loans A joint auto loan is where you and someone else — typically a partner and spouse — have equal responsibility for an auto loan. The lender will consider both incomes and credit scores in deciding whether to approve. Joint applications can lead to a lower interest rate as well as the chance to accept more of a loan because of the added income. Auto loan co-signed loan Co-signed car loan can be described as a loan where you still have the complete responsibility for your monthly payments, but you have another person supporting your loan. Similar to the joint auto loan the credit history and your co-signer’s credit history will be considered during the application process. This will increase your chances of approval, which could translate into more and better terms. The main thing to remember is that if you’ve been denied, you should take the time to think about it. Your lender should provide a letter that explains the reason for your rejection. Similar to everything related to finance, preparedness is key. Next time you apply, do your research, keep an eye on your credit score, and reduce the total amount of debt you have before time. This will ensure that your application is the best it can be before you submit it to the lender. Learn more

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Written by Business and personal financial Contributor Kellye Guinan is a freelance editor and writer who has more than five years ‘ experience within personal finance. She is also employed full-time at the local library where she helps the community gain access to information on financial literacy, among other topics. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since the end of 2021. They are committed to helping readers gain the confidence to control their finances through providing concise, well-researched, and clear details that cut complex topics into manageable bites.

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