4 Reasons You Weren't Approved
It’s a terrible, kick-in-gut kind of feeling, but it’s bound to happen to us at one time or another.
You find a car you want. You envision yourself driving down the highway with it, blasting your music a little too obnoxiously because you’re a new car owner and you can do what you want.
You apply for the car loan.
You try not to get your hopes up (while secretly acknowledging that they already are up).
And then, the verdict:
Application: declined.
You’re crushed. You’re devastated. But you take the blow to your ego like a good sport, internally, you’re wondering: “when will the injustice ever end?” Which, roughly translated, means: why was I declined?
Above anything, lenders consider how much of a risk you pose before they decide whether or not to give you money. Here are a few things lenders may see as red flags when viewing your application for a car loan.
1. Bad Credit History
Defaulting on existing loans, failing to pay, or being late in paying your bills, can all take a toll on your credit score. And in instances where you know your credit is less than stellar, it pays to know exactly what your credit score is. Appealing candidates usually have credit scores in the 700+ range; anything in the low 600’s or below won’t look too compelling to lenders. Other red flags may include whether or not your account went to collections, or if you declared bankruptcy. While it may seem straightforward, making your payments on time is the best way to ensure that your credit score will be good when you do decide to apply for that loan.
2. Low Income
Even if there are no deficiencies in your credit score and you have the best credit score around, if your current income is lower than the typical minimum cost of living, then you might not be approved for a loan. Harsh, we know. But lenders look at everything before they consider approving you, and the sad reality is that if you aren’t making enough to make minimum living costs, they aren’t going to sleep peacefully at night knowing they lent you money you may not be able to pay back.
3. Too many expenses
On the other hand, if you have a high income but an overwhelming amount of expenses, that can also suggest to lenders that you will be unable to commit properly to repaying the loan. Too many hands in too many cookie jars, as they say.
4. Length of employment
Being at your current job for a long period of time will give lenders a sense of security. Conversely, switching jobs right before you apply for a loan can seem sketchy or cringe-worthy to lenders, and doesn’t exactly instill trust in your future loan-paying abilities. While it’s ideal to have been at your current place of employment for a year or more, remaining in the same industry of work (if you do happen to switch jobs right before applying for a car loan) can still be viewed as the ‘same line of employment’ by lenders.
At BC Drive, we don't want your past or present financial situation to deter you from driving the car you desereve. We make sure we find you the best car, and best auto-financing options, no matter what your credit is. It only takes five minutes to apply - what are you waiting for?