Follow These Tips To Prevent Your Car Loan Application From Getting Rejected
Did you apply for a car loan and your application got rejected? This is a disappointing situation that many Canadians go through at some point in time. More often than not, car loan applications get rejected because the applicant lacks creditworthiness to win the confidence of the lender. There could be other reasons behind the rejection.
Getting approval from lenders to acquire a car loan can be a challenging affair. You can, however, prevent this situation with the help of the following tips:
Know the credit requirement
Your credit score is one of the most important factors determining your lender’s perception of your credibility. Some lenders have a minimum credit score requirement for granting auto loans, but there are others who don’t require a credit history. You should know the credit requirements of different lenders and check your credit report thoroughly before applying for a loan.
Decrease your debt-to-equity ratio
In simplest terms, a higher debt-to-income ratio means you owe more than you earn, which can be a matter of suspicion to lenders. They may feel you might fail to repay your loan. Hence you should pay off any outstanding debts before applying for a car loan. This will show lenders that you are a good paymaster.
Know your income requirement
In addition to credit scores, some lenders have a minimum income level, which applicants have to comply with. Lenders want to ensure that they will get their monthly payment in all situations. A decent income level of the applicant comes as an assurance for lenders that their rate of defaulted loans would be low.
Look for a cosigner
In case you fail to meet the credit or income requirement of lenders, you can find a cosigner who would guarantee the repayment. Many people do this because not everyone has a credit history that lenders look for. You have to, however, ensure that your cosigner has a good credit history. This helps you get your application approved without much hassle.
Don’t let bad credit stop you from buying a car. Follow these tips and make your dream come true.