Here's The Number of Reasons Why Your Car Loan Is Not Getting Approved
The most important part of a car purchase is the financing part. While some people may have the money to pay for their vehicle outright, most of us will be looking to finance at least some portion of our loan. However, not everyone who applies for a car loan gets approved.
The most important part of a car purchase is the financing part. While some people may have the money to pay for their vehicle outright, most of us will be looking to finance at least some portion of our loan. However, not everyone who applies for a car loan gets approved. If you are one of those who have had experiences with getting their loan rejected, or you want to avoid rejection when applying for a car loan, then this article is for you.
You Don't Have a Co-Signer
A co-signer is a person who signs the loan with you, and they will be responsible for the loan if you default. A co-signer can be anyone from your spouse to a family friend or relative. If you do not have a co-signer, your car loan will likely not get approved.
You Don't Have Enough Down Payment
A down payment is an amount you pay upfront before getting a loan. It can be as little as $1,000 or even nothing, but it's a good indicator of your ability to save money and pay off your loan on time. If you have more than enough saved up for the down payment, lenders will see that as an indication that you are financially stable and will confidently approve your application.
You Have Too Much Debt
If you're looking to buy a car, your debt-to-income ratio will be a significant factor in whether or not your lender approves your loan. Lenders want to see that you have enough money coming in each month to pay all your bills and expenses on time, plus some leftovers for savings. To calculate this number: add up all the monthly payments on any loans or credit cards and divide it by how much money you make each month (your gross income). If the result isn't below 36%, then the chances are good that no lender will give you a loan with such a high DTI ratio — but there's still hope!
If you're unable to get a quick loan, try to approach a factoring company to finance your accumulated invoices through a finance mechanism called invoice factoring. The factoring company will help you reduce your DTI ratio by freeing up liquidity that would otherwise have been loaned.
You're Not Making Enough Money
While you might think that a car loan is an answer to your problems, it won't solve anything if you don't earn enough money to cover your monthly payments. To qualify for a car loan, you'll need to make at least $1,500 per month. If that number sounds too high for your current situation, consider boosting your income by getting another job or finding one that pays more than what you're currently making.
You Have a Poor Credit Score
If you have a bad credit score, it will be challenging to get a car loan. A low credit score means you have a history of not paying your bills on time, which is not something many lenders want to see. If you have a low credit score, you may also find that the interest rate on your loan is higher than if you had better credit.
If this sounds like something that could be affecting your ability to get approved for financing, know that it's not necessarily impossible: there are solutions available. If you are a business person who has a bad credit history, you can opt to use invoice factoring to improve the cash flow of your business.
Invoice factoring is a form of financing that allows you to get paid immediately for your invoices. You sell your invoices to a factoring company through invoice factoring, which pays you up front in exchange for the right to collect the money owed on those invoices. Invoice factoring will help free you from the cash crunch resulting from accumulated invoices, thereby helping you improve your credit score.
Don't Fret. You Can Still Get a Car Loan!
You don't need a co-signer to get a car loan. If you cannot get the car because of your debt history, the lender may not have to look at the whole picture. By simplifying and consolidating your bills, you will find that your credit scores will improve dramatically in as little as 12 months! Try to approach a factoring company if you have accumulated invoices for the best financing option (invoice factoring) that will improve your credit scores.
You can get approved for a car loan even if you have too much debt. Don't assume that just because someone has been turned away from another bank or lender means they cannot obtain financing.
Are you looking for a car loan? Contact us for the best advice.