It doesn’t matter if you’re shopping for a new car or a used car, there will come a point early in the process when you must answer this question: how will you pay for the vehicle?
Like most people, you may be interested in securing a car loan. This allows you to finance your purchase over a term that generally lasts anywhere from 12 to 84 months.
But here’s the problem: there’s no guarantee that your car loan application will be approved.
Should you run into this issue, it’s not time to panic. Instead, there are some basic steps you can take to better understand what happened and what to do next.
Here’s the best approach:
1. Find Out Why
Above all else, you want to find out why your car loan was denied. This helps you better formulate a strategy moving forward.
Were you denied because you have too much other debt? Because your credit score is poor? Because you don’t have a long credit history?
If you don’t know the reason for your denial, you could continue to run into the same issue.
2. Contact Other Lenders
Just because one lender denies your car loan application doesn’t mean that every other lender will take the same approach.
As a general rule of thumb, connect with a minimum of three to five lenders. This gives you a better overview of what’s available and which lender is best for your financial circumstances.
3. Don’t Rely Solely on the Dealer
Many people fall into the trap of letting their dealer’s finance department manage the entire loan process.
Even if you are approved for a car loan, you may have questions about whether or not you could obtain better terms and conditions on your own.
It’s okay to turn to your dealer for guidance, but don’t let them manage the entire financing process. You should take control from the start.
4. Improve Your Credit Standing
There may come a point when you realize that you’re not going to qualify for a car loan at the present time. As disappointing as it may be, it’s not the end of the road. You simply need to make some changes in your life.
Take this time to improve your credit standing, such as by eliminating debt and paying your bills on time. As your credit score climbs, so will the likelihood of an approval in the future.
Don’t let a car loan denial stop you from making a purchase. Even if it slows you down in the meantime, this doesn’t have to hold true over the long run.
With the right approach, you can turn your car loan denial into an approval. And when you do that, it’s only a matter of time before you’re behind the wheel of your new vehicle!