Look for errors on your credit report
Most lenders will look at your credit report to help them make a decision. If anything on here is wrong, it could affect your chances of being able to borrow the money to buy an auto. You can contact the major credit agencies or certain financial institutions and ask to see your own file for free.
Look for any names, dates, or figures that are wrong. If you spot errors, you can write to the credit reporting company and ask for it to be fixed. It is then a question of trying again once this has been done.
Improve your credit score
If your credit report is poor but you can’t see any mistakes on it, the next step is to improve your score. Your FICO score is a three-digit number that runs from 300 to 850. The average score is between 670 and 739, which is classed as being good.
There are a few ways of boosting your score. These include paying all of your existing loans on time every month and lowering the total amount that is outstanding. It can take quite a lot of time to improve a low credit score, but it is well worth making the effort.
Make the down payment bigger
The more money that you want to borrow, the stricter that potential lenders will tend to be. By making a bigger down payment and asking for a smaller auto loan, you will make it easier for them to approve your application.
It makes sense to come up with a financial plan that lets you do this. Maybe you need six months or a year to build up more savings. Or perhaps you can find some way of organizing your finances that lets you put down more money without any delay.
Double-check the numbers
Are you asking for more money than you can realistically afford to pay back? This is a common mistake, as people often over-estimate their ability to repay loans. It is important to understand how much you can truly afford to borrow.
Take some time to consider your income and your current expenses. Would it be better to ask for a smaller auto loan that you could pay back more comfortably? Lenders need to act responsibly and only give loans to those people who can afford to pay back the amount borrowed.
Look at more options
Just because one lender turns you down it doesn’t mean that they will all do the same. There are now more credit companies than ever before. By looking online for more options, you can see whether there are other lenders that are more suitable for your needs.
Not all of these lenders look at the auto loan market in the same way. For instance, some are mainly focused on lending to startup companies. Others may prefer to offer their services to people with poor credit scores or those that are in a hurry. Look for lenders that work with people in your situation.
Apply for a joint loan or with a guarantor
Adding another person to your loan application can help to make your case stronger. If a lack of sufficient income for the repayments is the issue, adding in a joint applicant can help to overcome this. In this way, their income also counts towards the total.
You might also be able to add a guarantor to your auto loan application. This is someone who agrees to take on the responsibility for your loan if you are unable to repay it for any reason.
By looking into these different options, you can see whether a change of approach is working considering.