Why You Weren’t Approved For a Car Loan
Owning your own car is a necessity if you live anywhere other than a city with public transportation. That is why purchasing a vehicle and qualifying for a car loan is so important. When it comes to being approved for your loan, there are several factors that can work against you.
While everyone knows that your credit score can either help you or hinder you in your process to get a car loan, they do not know that there are other parts of your credit that these companies look at. These different negative factors can exist even if your credit is decent and would normally be approved for a loan.
The first of these negative factors that can cause you to be denied for a car loan is a bankruptcy. Any bankruptcy on your credit report will give those who loan money reason to doubt your ability to pay the money back. Even if you have started to build your credit back up, this is something that will work against you for many years.
Something that is very serious that is often overlooked is child support payments. If you are behind in making your child support payments, many of those that would potentially make your car loan will automatically decline your application. Being late on such a critical payment gives the company that you are looking at working with the wrong impression of who you are and will make them wary of doing business with you.
A third factor that can work against you is an open lawsuit. Whatever the circumstances were for the lawsuit, this will almost always cause your loan application to be denied. If you were to lose your lawsuit, you will owe quite a bit of money. This can put you in a position where you may not be able to pay back your loan. This makes loaning you money a risk that the majority of companies do not want to mess with.
If you have any liens against you, whether they are federal or state, these can work against you while you are trying to get a car loan. There are several red flags that lenders will look for. Liens are one of them and will likely cause a lender to deny you a loan, no matter what your credit looks like otherwise.
While this may seem like common sense, a repossession is still a large reason that you may be declined for a car loan. Even if the repossession is older on your credit report, it still makes you a risk to loan money to. Very few lenders will choose to work with you in these circumstances since you have a history of not paying back money in relation to a car loan.
While your credit score does play a very large role in whether or not you will be approved for a car loan, there are other factors that the lenders will look for. These factors will help determine how much of a risk you are in terms of paying back whatever money you are trying to borrow to buy your car.