What Should I Do If I Keep Getting Turned Down for Auto Financing?

You’re in the market to purchase a new or used vehicle but, for some reason, you’ve been denied for a car loan or auto financing.

Chances are you’re wondering two things: 1) Why wasn’t I approved?; and 2) How do I get approved to purchase a car? Let’s walk through the basics.

Why You’ve Been Denied for Auto Financing

There are several reasons why a bank, lender or finance company may deny your credit application for financing to purchase a vehicle, such as:

• Errors on your application
  According to Credit.com, an error on your credit application (i.e. missed section, incorrect information, a missing form, etc.) can result in a denial. If this is the case, you should contact the bank, lender or auto finance company as soon as possible to alert them of the error.


• Bad credit
  Bad credit is a common reason many people get denied for credit. Based on the FICO® scoring model, credit scores below 670 are considered fair or bad.


• No credit
  Since lenders and auto finance companies look for proof of consistency in paying off past loans, credit cards or other debt when reviewing your credit applications, having little to no credit history is another reason your credit application may get turned down.


• High debt-to-income ratio
  When you have a high debt-to-income ratio, this means the amount of debt you owe exceeds the amount of money you’re making, which can make it more difficult for auto lenders and finance companies to approve you for a car loan or financing.

How You Can Get Approved for Financing

If you were denied credit because you have bad credit or no credit, below are some ways you can work on building your credit history:

1. Check your credit report.
   Monitoring your credit report is important to ensuring your credit history is accurate. You can get a free copy of your credit report from each of the three major credit reporting bureaus—Equifax, Experian and TransUnion—at AnnualCreditReport.com. If there are errors found on your credit report, disputing them can help improve your credit.


2. Pay your bills on time, if possible.
   Making on-time payments is one of the most effective ways to rebuild your credit. Even if you can only pay the minimum balance, do your best to stay on top of your monthly payments.


3. Get a co-signer.
   A co-signer may be brought on as an additional repayment source for a loan or financing, enabling you to obtain auto financing terms you might not otherwise be able to obtain. However, before you get a co-signer, you both should understand that the co-signer is responsible for the amount owed if you don’t pay.


4. Keep your credit balances low.
   Although having a credit card is good for establishing credit history, credit agencies such as Experian advise keeping your use of credit to no more than 30 percent of your total credit limit.


5. Find a car dealership enrolled with Credit Acceptance.
   Car dealers enrolled in the Credit Acceptance auto finance program have the ability to approve you for financing regardless of your credit history. In addition, because Credit Acceptance reports to the three major credit bureaus, you have an opportunity to improve your credit by making on-time car payments.

See if you pre-qualify on our website and we’ll connect you with a dealership in your area that can help you get started!

Click here to begin your online pre-qualification process