Refused Car Finance? – Top 5 Reasons Customers get rejected

Refused car finance but not sure why? Here are the top 5 reasons why a car finance application is not successful.

Credit Score

A poor credit score is the main reason why customers are rejected for finance. Whilst it’s not the only thing lenders considered, it’s a key factor in whether you will be successful or not.

Having a bad credit rating will not mean you are automatically rejected when you apply. However, a poor credit rating will at best limit your options when looking for a suitable car finance deal.

Never taken out credit before? A small or non-existent credit history can just be as bad as a poor one. Lenders will be unable to see how good you are at paying your bills on time and keeping on top of your debts, making you a bigger risk to lend to.

Employment Status

Your employment status is another factor that is taken into account. The positive news is if you are employed in full-time or part-time work, you should be able to find a suitable for you.

Those who are self-employed or have an income that does change every month may find it harder to obtain finance. The reason for this is because of the uncertainty that comes with not having regular monthly pay makes car finance lenders wary of accepting the application.

Age

Whilst you can pass your driving licence at 17, if you want to take out a car finance agreement you will have to wait until you are at least 22 until you are accepted. The main issue here is that most young people have a limited credit history.

Affordability

Responsible Lending practices are a key part of the finance process that borrowers go through. When looking over your application, lenders will look at your monthly income and spending patterns to see how much money is left at the end of the month. If a monthly car payment would wipe out your remaining budget, it’s likely your application could be refused.

Mistakes

A big reason for applications being rejected is because of simple mistakes. A slight error with an address, a wrong date or a typo could make all the difference between your application being accepted or not.

The best way to avoid this happening is to take your time and double-check all your details before you submit your application.