Car finance can be a fantastic way to secure the keys to your dream ride. However, it’s not uncommon to be refused the first time around. There are all kinds of reasons why you may have been refused car finance, some easy to overcome and others a little more complicated.
The good news is, there are always options. If you’ve been refused car finance but believe you’re a reliable and worthy borrower, this guide is for you! Read on as we cover everything you need to know about how to deal with a rejected car finance application, what to do next and the steps you need to take to get behind the wheel of a new car.
Step 1: Understanding why you were refused car finance
The first step is to get a better idea of why you were refused car finance. Understandably, most lenders are strict about who they approve for finance. After all, a car finance loan is a big commitment and lenders want to make sure they recoup their investment. Here’s a few of the most common reasons why you may have been refused car finance:
· A lacklustre credit score
A poor credit score is one of the most common reasons applicants are refused car finance. Most lenders use consumer credit reporting agencies such as Equifax or TransUnion to assess the suitability of car loan applicants. Equifax issues scores of between 0 and 700, with the average Brit clocking in at around 380. TransUnion rates borrowers on a 0 – 710 scale, with averages in the UK sitting at around 610. Experian is another popular agency and ranks you on a scale of 0 – 999.
It’s not always easy to maintain a glowing credit score, as many Brits know. If you’ve ever missed a payment on your credit card, you’re not alone. The latest YouGov research revealed around 15% of UK adults have defaulted on credit card payments, which can knock a decent amount of points off your credit score. The figure is even higher in London, where 19% of credit card holders have missed a payment.
· An ambitious budget
In other cases, your budget may be too ambitious for lenders to approve. When assessing your application, lenders will consider factors such as your income and ongoing life expenses to determine if you can afford the loan. If there are any doubts, your application may be refused.
· Incomplete application
Your application doesn’t just offer lenders insight into your borrowing history but also your competency and organisational skills. Incomplete applications can be an instant turnoff for lenders, so it pays to give your documents a thorough once over before hitting send.
Now you have a better idea of why you were refused car finance, let’s take a look at what to do next…
Step 2: Enlisting the help of experts
Car finance can seem complicated but with the help of experts, it doesn’t have to be. At My Car Credit we specialise in getting Brits into the driver’s seat of their dream cars, no matter what their credit score. How do we do it?
· A large lending panel
With access to one of the largest lender panels in the country, we take a wide-reaching approach to car finance. Instead of considering just a handful of preferred lenders, we reach out to dozens of creditors across the country. This drastically improves your chances of being accepted for a car loan, no matter what your circumstances or borrowing history.
· Award-winning technology
We’re part of Evolution Funding, one of the largest and most trusted car finance brokers in the UK. Our service is backed by their award-winning technology, making it faster and easier for us to match your loan application with the right lender.
· A personalised approach
There’s no one-size-fits-all approach at My Car Credit. We assess every car finance application individually, meaning you’re matched with the best possible lenders for your unique circumstances.
Step 3: Improve your chances
After you’ve developed a good understanding of why you were refused car finance and have enlisted a team of experts to help with your application, it’s time to start improving your chances. Here’s how:
· Boost your credit score
There are lots of ways you can boost your credit score, some easy and others requiring a little more time and dedication. Registering on the electoral roll and keeping on top of regular payments such as a credit card or phone bill are both great ways to improve your credit score. If your credit score is lacking due to a lack of financial history, applying for a basic credit card can be a good way to develop a positive paper trail that establishes you as a reliable borrower.
· Pad out your deposit
A small deposit suggests you’re just scrimping by and can be a red flag for lenders. Saving cash where you can and using it to pad out your deposit is a foolproof way to improve your status as a borrower and show lenders you can commit to a regular savings regime.
Securing car finance with poor credit
Just because you have a less-than-perfect credit history, it doesn’t mean you’re out of the running for a loan. With the right approach, your chances of securing car finance with poor credit are high. If you’re struggling with other barriers such as being self-employed or a lack of credit history, we can help.
Ready to get the wheels moving on your car finance application? Get in touch by emailing enquiries@admin or give us a call on 01246 458 810 to find out more about how to proceed after being refused car finance.
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