Access to a vehicle is majorly essential for most adults that work part-time, full time, or are responsible for driving their children to and from school. However, purchasing a car is a major investment and buyers are unlikely to have the funds to purchase their vehicle outright from a car dealer. Therefore, buyers rely on their ability to secure a pre-approval loan so that when they find a car that suits their living needs, they can enter a payment plan. If you’ve recently been denied a pre-approval loan here are a few possible reasons why:
Inopportune Timing
The status of your mortgage pre-approval loan may be affected by your current financial stability. For example, if your current job has you on workplace probation, which is common for a worker in their first 90 days of employment, you may be denied a pre-approval loan. Additionally, if you had recently applied for another loan (i.e. mortgage loan, student loan), a lender may deny you based on their financial assessment.
Insufficient Documents
Before you can be approved for a pre-approval loan, you’ll need to ensure you have the proper documents on you. If you enter a car dealership without the necessary documents and plan on securing a loan, you will be turned away. Ensure that you have your driver’s license, proof of income statement, as well as information regarding your auto insurance before you walk into any accredited lender’s office.
Unreasonable Loan Request
The reason that proof of income statement is critical in securing a pre-approval loan is that it gives the lender an idea of how much money you make and if that income is consistent enough to pay back on time. For example, issues may arise if a full-time worker who earns $2500 a month wants a loan to purchase a Mercedes-Benz G Class for $131,000. A lender would look at a request like that and deny it, especially if you do not have a perfect credit score.
It’s wise for you to temper your expectations and make an investment in a car, truck or van that will not put you in-car debt.
Young Credit
Our advice for young adults who have not yet applied for a credit card is: apply for one and begin building your credit score. Good credit is based around your reputation of paying back your dues in full and on-time. If you have a perfect credit score but have only had a credit card for a week, a lender may refuse to offer you a pre-approval because you haven’t established yourself as trustworthy – yet.
For more information on what you can do if you’ve been denied a pre-approval loan, apply today at The Car Club!