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Common Reasons You’re Refused Car Financing

by | Dec 11, 2020 | Car Finance | 0 comments

Everybody deserves the opportunity to turn things around with their life and to finally get ahead in the game. Most of the time, your circumstances can be readily turned around if only you get access to transport that will make it easier for you to move from one place to the next.


If you’ve put in an application for car financing but got the thumbs down before, you’re probably having second thoughts about having to send in another car finance application again. The fear of getting rejected once more can be quite daunting. In most cases, denied applications for any finance will never really get any concrete explanation from the lender as to why your application could not push through or refused. So, more often than not, you’ll be left wondering what exactly it is you did or didn’t do that led to the rejection. Even now, you’ll still probably be asking yourself what it is exactly that you did wrong.


Poor or bad credit rating?

Have you had late payments with your bills? In the last six years, have you had a CCJ or County Court Judgment against you? Did you have to file for bankruptcy recently? Any of these situations can have a massive impact on your credit ratings. It could also be that you have a very low credit history or you have no credit history at all. If you even have no idea what a credit score is, then you probably belong in this category. However, this doesn’t mean that you will no longer have any access to car financing or any kind of finance at all.


Establishing a credit history is not something you can do overnight. You need time to build one. The same is true for building up your damaged credit ratings. However, there are small and consistent things that you can do on a regular basis that might help improve your credit score over time and as added options. For instance, purchasing small items like household appliances, TV or furniture via financing might help. You can also do the same thing via hire purchase where there is a regular payment schedule for you to follow. Provided that you will stick to the payment schedule and will get your dues paid on time, this can help establish how credible you are as a borrower.


Are you an elderly or young borrower interested to apply?

UK laws require borrowers to be no younger than 18 years old if they are to take out financing to some lenders. Young adults will usually be required to present a guardian or their parents to serve as a loan guarantor. Those who are retired and are now depending on their pension for a living might think that securing financing may be impossible, especially if they wish to own a vehicle or even just lease one. However, this isn’t always the case.


While it is true that your credit score can play a huge role in whether or not you’ll get a car loan approval, what really matters is that you are able to pass the specific lending criteria that a creditor or lender has set for a car credit. This can vary from one lender to the next so getting rejected by one lender before doesn’t mean that your application will meet the same fate if you decide to try again to another lender.


This is something that every interested borrower should always remember. Lenders will need you to provide them with details of your financial histories as this can be their basis in determining whether or not you are a responsible enough borrower of any cars. When they can see that you, despite your poor credit score, they may still choose to approve your loan application.


Moving to the UK?

If you have plans to move to the UK or have just recently arrived in the country, securing a financial credit may be a bit of a challenge. A good start would be to get your name entered on the electoral roll. This makes it easier to verify your identity. Also, if you ever have any outstanding debts in the last country you reside in, see to it that you have them paid off first. It’s important that the last residential address you had for the past 3 years is traceable too.


How does driving record affects credit?

Are you a full driver’s license holder? It could be possible that you still hold the Big L or a Learner’s License— an indicator that you’re not really fully licensed to be driving a motor vehicle around. Also, there are specific criteria that might affect your chances of securing a credit based on your driving records. This could include accident claims. If you have been slapped with some traffic infringement before like a speeding ticket, this can affect your credit ratings especially if you fail to get it settled on time.


Where did you send your application for car finance?

Where you choose to apply for car financing can affect whether or not you will get approved. You might want to look for lenders that offer specialized financing to borrowers who are known for having low credit score or those with no established credit history even. It is always worth your time to search for companies that have specialized their services towards offering a chance for people who are trying to rebuild their credit score or those that want to establish one. This is because they are most likely to offer a more lenient approval process where their main criteria aren’t just going to be solely focused on what credit score you have.


There are a number of online lenders today that can offer this even you have a low credit score or credit history so take the time to get some research done ahead of time of who these lenders might be. More importantly, you can take advantage of online eligibility checks for personal loan borrowers and these checks aren’t going to have any effect on your credit rating.


In conclusion why you get rejected

There are certain criteria that you must satisfy first if you want to succeed in your attempt to secure car financing. Among these include your personal histories which involve employment, expenditure and income, address and residential as well as credit for the lenders to evaluate.


You have to be ready to offer documentary proof along with the application you are sending out too. This is because failure to do so can mean getting your application rejected or denied. It doesn’t hurt to get some research and reviews done ahead of time too. Remember that every application you send out that gets declined by lenders can negatively impact your credit rating.