After being rejected by the dealer, you’ll have to find out what went wrong and learn how to fix it before trying again. Here are tips to consider if you want to get approved for a car loan after being rejected. First, you’ll want to be proactive about this process and stay on top of it to avoid missing payments and damaging your credit score. The sooner you follow these steps, the better your chances of getting approved next time around.
Before you even start looking for lenders, it’s essential to make sure you’re in good standing with at least one of your major credit card issuers or lenders. You should always review your credit report and look at where you stand on both positive (paying on time) and negative (late payments) data points. If anything looks off, it’s probably worth researching those issues before trying to get an auto loan.
Understand what factors caused them to deny your loan. There was likely something about your financial situation that raised red flags. Dig into those factors and work to improve them before attempting your next car-loan application. This will also give you time to research new lenders and vehicle financing options, which can be extremely helpful if you’re shopping around for better terms or lower interest rates.
Figure out how much you can afford in your monthly payments. For example, if you’re trying to finance a car at an interest rate of 12%, you’ll need much more disposable income than someone who can qualify for a 5% interest rate. You may also consider what type of vehicle you should buy and research current prices and manufacturer incentives.
According to Lantern by SoFi, “Applicants could qualify for a lower interest rate through refinancing—which could mean lower monthly payments and saving money in the long run.” And if you’re trying to buy a new car but don’t have enough cash on hand, you can refinance your current auto loan. After vehicle refinancing with Lantern, you’ll be able to put that extra cash toward your next vehicle purchase.
Many online lenders can give you a bad credit auto loan. So if your bank or credit union turned you down, don’t despair. You still have options. Lenders like SoFi offer loans to those with bad credit or no credit history. Once you provide some basic information about yourself and how much money you need, these sites will show you all available financing options from multiple lenders so that you can compare rates and terms before making your decision.
When buying your next vehicle, take your time and shop around. If you can afford it, consider financing through your credit union if you have one available.