Declined Car Loan Application

Before a lender decides to offer you a loan, they must assess the risk you pose. If you are unlikely to be able to repay the loan - including interest charges as specified in the loan contract - then a lender may decline your application. The mains reasons why you would be refused a car loan are:

• Poor, little or no credit history
• Ex-bankruptcy
• County Court Judgements (CCJs)
• You were already refused by another lender

If you have been refused a loan in the past, your credit rating is affected. Like any financing option, managing a declined application is important if you do not wish it to have an adverse effect on your credit history.

The first thing to do is contact the lender who rejected your application. You are entitled to know exactly why they rejected it. If the rejection was largely based on details contained within a credit report, you can ask them for the name and address of the credit reference agency from which they obtained this report. You can then ask for a copy of your report from this agency, which may help clarify why your application was rejected. For more details about credit reports and how they can be examined and improved see Credit Rating.

You may wish to apply for another car loan with a different lender. It is often advised to wait a little while before doing so, as applying for a number of car loans in a short period of time adversely affects your credit rating. If you need the loan quickly, you could apply for a bad credit car loan instead. These loans are usually accepted, even if you have a poor credit rating. If you make repayments on time and in full each month, you may then be entitled to refinance your car loan and subsequently find a better deal with another lender. For more information see Refinance Car Loans.