Finding auto financing with competitive terms can be a challenge if you have poor or no credit. Some banks are willing to accept applications from borrowers with а borderline score provided that they have stable income and good debt to income ratio. If your score is low, you may want to look into non-traditional lenders because they have more lenient requirements. They will factor in the condition of the vehicle, the length of the term, amount required, down payment offered, etc. Auto loans for people with poor credit are available online as an alternative to the frustration of dealing with banks and dealerships. Some lenders offer auto financing to consumers with a history of repossessions, consumer proposals, maxed out cards, written off accounts, collections, and late or missed payments. This is one alternative for consumers with bad credit and major issues who plan to purchase a vehicle.
Here are some other reasons your loan application might be rejected:
You have inconsistencies with your information. If a lender finds inconsistencies between the information you gave him on your application and what he’s discovered doing his own verification, it could be grounds for rejection. For instance, you put your income as $50,000 but when he calls your company to verify, they say you make $40,000. That’s going to raise some concerns. You have to be straight with the lender. Don’t make anything up and answer questions honestly.
You have been employed less than two years. Lenders want to know you have a stable income. They like to see you have a job for at least two years when you apply for a loan. Try not to make any drastic moves (like quitting your job or changing careers) before turning in your application.
You have lost your job. If you lose your job right before you close on a home loan, that’s grounds for instant denial of your application, unless your spouse earns enough to support the mortgage payments on his or her own. Try to get a new job in the same field with a similar salary before you apply again, or you may be subjected to the two-year employment rule.
You have recently added new debt. Don’t buy a new car or another large-ticket item before you apply for a loan or after you’ve turned in your application. Lenders don’t like to see your financial picture change during the loan process. If you make a purchase that will severely alter your debt-to-income ratio, you could be rejected.
You refuse to provide new documentation. If a lender asks for more information, be sure to provide it. If your file is incomplete, your loan could be denied. However, if they keep asking you for the same information over and over, it could be a scam. Be sure to keep copies of all the documents you’ve shared and sent everything by registered or certified mail so you have a paper trail of everything that you’ve sent.
What to do if you’ve been turned down for a loan
If you’ve been turned down for a loan, don’t be discouraged. Not all loan officers are created equal. Some lenders are willing to work with people with credit problems. If at all possible, talk to your own bank first. If you have a bad history with that bank, try another lender. Please call our toll free line to speak with an expert.
Should I Use a Co-Signer?
If your credit history is poor, limited or non-existent, you may want to think about getting a co-signer for a credit card, mortgage or auto loan application.
You’ll have a much easier time getting approved for credit if someone else with proven financial history signs onto the loan with you. The creditor knows it will have someone who can pay the bill if you don’t – the co-signer is on the hook for the entire loan amount, and the bank can legally come after him or her for the money. A co-signer can be a family member or friend. But keep in mind, you’re asking for a pretty big favor. When you sign up together, you’re linking your credit with your co-signer. If you do miss a payment, you’ll be taking his or her credit along with your own. Your friend’s credit history will show that she missed that payment, and her credit score will tumble. If for any reason you find you’re unable to pay the bill on your loan, make sure to tell your co-signer (before the payment is due) so she can make the payments and protect her credit.
Consider what happened to Jerome and Lisa: Jerome wanted to buy a used car for his commute to a new job. He didn’t have any credit cards and had never taken out a loan before. Without any credit history to support his promise to pay back the car loan, the bank wasn’t willing to give Jerome a loan by himself. Jerome’s sister, Lisa, agreed to co-sign the loan so he could get the car.
Unfortunately, Jason was laid off from his job after six months and couldn’t make the car payments. Now Lisa is stuck with the car payments because she doesn’t want late payments or unpaid bills to show up on her credit report.
When deciding who to ask to co-sign your loan, pick someone with whom you are willing to be honest with about your credit history and problems. This person may ask to see your credit report to determine just how risky a proposition it is to co-sign for you. Before choosing a co-signer, ask yourself what kind of a co-borrower this friend or family member is going to be. Will he harp on you constantly about paying your bills or trust you to make the payments? Will he ask you to provide him with an accounting of your on-time payments?
Auto Finance World has been helping people get financed for the new or used vehicle they need since 2012. If you are at least 18 years of age and employed with a minimum monthly income of $1,500-$2,000, we can help you get financed regardless of your credit situation.