5 Things that can Stop You from being Approved for a Car Loan
If you want your car loan application to obtain a fast approval, be sure to avoid the following factors.
Are you considering applying for a car loan soon? Fortunately, there are many auto loan products that are being offered to consumers by traditional and non-traditional lenders these days.
However, despite the robust competition among loan providers, getting a good auto loan is a challenge. Lenders are still meticulous and cautious when approving car loan applications as they aim to minimize risk.
Why do lenders disapprove or reject some auto loan applications? Here are five factors that usually lead to a loan application disapproval. Avoid these to be able to easily get a highly sought-after loan approval.
1. Incomplete loan application form.
Before getting any loan, you will be required to fill up or complete a loan application form. It is a basic requirement. You are expected to supply all relevant personal information about yourself. The usual data asked for includes your complete name, address, age, and civil status. Take note that all information required is relevant and should be supplied. Do not leave any space or field blank.
“You are expected to supply all relevant personal information about yourself.”
2. Inaccurate data.
Make sure you are giving out only accurate information about yourself. Lenders will always perform a background check before considering giving your loan application an approval. If they find out you have lied in any data you disclosed, you will automatically be denied. Lenders are very anxious about dealing with high-risk individuals. If you cannot be honest in small things like simple information, how can you be trusted by loan providers?
3. Low credit score.
The credit record is a crucial factor in getting a loan approval. A low credit score will not help. In fact, a bad credit rating is avoided by any lender. It will help if your credit score is high by the time you apply for a loan. A bad credit record is as bad or worse than not having any credit record at all. With the right patience and discipline, it is possible to boost your score and boost your chances of securing a loan approval along with it.
“It will help if your credit score is high by the time you apply for a loan.”
4. Lack of income.
Of course, no loan provider will lend money to an individual who has no income. Any lender will always consider the way you will meet your financial obligations and make timely repayments. At the same time, the loan-to-income ratio will also be analyzed. As a basic principle, loan repayment should never make up more than 50% of your regular income.
“No loan provider will lend money to an individual who has no income.”
5. Lack of property.
Some lenders offer what they call as a secured loan, which requires collateral as a form of security. These types of loans make lenders care less for your credit score. They have an assurance that the car loan would not fall into a default because there is something they can get hold of if you fail to repay your dues. However, you may consider applying for the more popular unsecured loans available in the market today, especially if you dislike the idea of having to secure your responsibility with an existing property.