So you’ve been thinking about getting a new car for months and have finally decided to go ahead and apply for finance. But what happens if you get refused by the company(s) you have just sent your application to?
We’ve got 6 reasons as to why you may have been denied finance in the first place and how you can go about avoiding this from happening altogether.
- Poor credit score – If your credit score isn’t in the best shape and is relatively low, this can contribute towards a refusal of finance. If you have outstanding debts, missing or late payments on your mortgage, credit cards and bills, they can potentially stay on your credit file for six years. However this is not the only reason that you may have a poor credit rating. It is possible that you may not be on the electoral register; you have a CCJ, or have been changing addresses frequently. It’s crucial that you find out why you have been rejected by the lender so you are able to build your credit rating back up again.
- Age – Each lender has different criteria and your age can be a factor when you apply for car finance. Some lenders may have lower age limits, some may be higher, but most lenders will help those who are at the age of 18. It’s important to remember that in the view of some lenders, an applicant will be deemed not to be in the correct age bracket.
- Type of car – Depending what car you choose will also make all the difference in regards to whether you are approved for a car finance application. Do not expect a positive outcome if you’re only 21 and you apply for a Bentley! Remembering to be realistic is crucial when you decide to seek finance.
- Status of employment – If you are applying for car finance, the first thing you need to take into consideration is that most lenders will expect you to be employed; they will also expect you to have proof of regular income easily available to them. However, if you are unemployed, or if you’re a student, you can find it more difficult to get finance approved.
- UK Driving license – A fairly obvious one, but you do need a full current and valid UK driving license in order apply for car finance. If you haven’t passed your test or have been banned from driving, finance lenders will not look on this favourably.
- Credit cards – If you have unused credit cards that have just been opened, this can sometimes cause complications as you have unused credit in your name. So do be aware of this if you are applying for car finance as this could affect your application.
These are just six of the main reasons as to why you may have been declined car finance. If you’d like to know more about why your car finance may be declined, you can get in touch with us now and we will be able to advise you further.