Imagine a scenario. You have picked your dream car and then apply for an auto loan to only find that you do not meet the eligibility criteria. You will be disheartened. Your all hopes of buying a car will be totally quelled, but you should not rake up what had happened. Instead, you should find out the reason for rejection.
There can be a lot of reasons for the rejection of a car loan application.
- One of the most common reasons is your paperwork are incomplete and information you provide is erroneous.
- Secondly, you may not have enough income to qualify for the loan.
- Further, you may have already taken on too much debt, and last but not least, you have either no credit history or have bad credit rating.
No lender will tell you the reason why your loan application is rejected. However, there are some lenders that can let you know the reason if you request them. If you have applied for a car loan and it has been rejected, you should immediately find out what accounted for it and then try to figure out what you can do it to have it signed off on.
First off, check your credit score
Bad credit rating is one of the reasons for having your loan application turned down. Before you apply for an auto loan, you should get a copy of your credit file from credit reference agencies to see if your credit rating is up to snuff.
You can get the copy of your credit report free once a year. This will be good news if you see your credit score is perfect, but there are scenarios when your credit rating is foul. What will you do? You have two options:
Option 1: put off your purchase until your credit score improves
If you want to avail yourself an auto loan at competitive interest rates, you must have a good credit rating. If your credit score is less than perfect, you should put over your plan of buying a car and improve your credit score. To do so, you will have to settle all of your dues on time.
- If you have currently no debt, try to take out an instalment loan. Since you will be paying down the whole of debt in fixed instalment for a fixed period, this will show your loyalty and as a result your credit score will go up.
- If you have a credit card, try to make a purchase with it and then pay it within the interest free period. This approach is favourable when you have no credit history at all.
Option 2: apply for a bad credit car loan
If you cannot out off the decision of buying a car much longer, you should seek applying for bad credit car finance in Ireland. Because your credit rating is poor, you will likely get a deal at slightly higher interest rates than those who have a stellar credit file. Bear the following points in mind if you want to get the most competitive deal:
- Research to find out the market rate. Make sure that you apply to a lender that offers these deals at affordable interest rates.
- Try to submit a large deposit size. Since it will mitigate the risk of the lender, you will likely get the loan at attractive interest rates.
Know the requirements
Before you apply for the loan, you should double check you are eligible for it and you have completed the paperwork. Check thoroughly you have fulfilled all information correctly.
You cannot get proper estimation if you can afford to pay the loan beforehand you do not know the real interest rates levied and add-on fees, but you can use online loan calculators to get an estimated cost of the loan. Make sure that you will be able to pay off that amount after meeting all of your regular expenses.
Get a co-applicant
If bad credit rating is holding you back from qualifying for the loan and you cannot put off your decision, the last resort is getting a co-applicant. It can be your friend or family member. Make sure that the co-applicant has a good credit rating.
If your auto loan application has been turned down, you should find out the reason and then try to fix the issue. Rejection is normal. If you have faced it once, do not lose hope. Reapply for it.