I Had My Car Loan Declined. What now?

By Angela Monroe - February 25, 2022

I Had My Car Loan Declined. Now what

If your car loan application gets declined, you’re not alone. Every year, hundreds of thousands of people apply for car loans here in Australia.

Most loans get approved but some don’t.

Here’s why some car loans get declined and what you can do in the event a loan is declined. 

Plus, we uncover some top tips to note before applying for a car loan again.

Why some car loans get declined

Why some car loans get declined

Loan applications are almost always case-by-case, meaning that all are reviewed separately by lenders.

There can be many reasons why your car loan application may have been declined. 

Some common reasons include:

  • Defaults in your credit history: If you have made defaults on your credit card bills or other bills, lenders may decline your application
  • Your current employment status and income: If you’re not employed currently or your employment is unstable (eg. recent casual work or cash in hand work), lenders may decline your application. Also, if you’re self-employed and you have not submitted all required documents, your application may have been declined.
  • Outstanding debts / over committed: If you have too many outstanding debts or repayments and you don’t have enough savings in your bank account, lenders may decline your application.

In most cases, a lender will decline a loan if the applicant’s credit / financial situation can’t support loan repayments. 

Remember that lenders try their best to approve loans, that’s their job! Lenders, like all businesses, want customers.

Also, like all businesses, they want to offer excellent customer service.

Steps to take before reapplying for a car loan

Steps to take before reapplying for a car loan

First of all, you can obtain your credit report and review it for errors. Fixing errors can improve your credit history significantly. Reporting agencies like Equifax can supply you with a copy of your report. Note that if you require your credit report quickly or multiple reports in a short amount of time, there can be fees attached.

Reduce debts

Minimise your existing debt as much as possible and try to pay off your existing debt completely before you reapply for a car loan. However, if it isn’t possible, you can always consolidate or refinance your debts to shrink them to some extent.

This can be a good option for some people.

Improve your financial situation

If you’re self-employed, make sure to arrange all required documents to prove your income. And if you’re unemployed, you’ll need to show lenders some viable income. Otherwise, try to show some surplus each pay cycle in the lead up to reapplying.

Change your spending habits

If your spending habits had an impact on your decline, try to improve them before reapplying. This means minimal frivolous spending, avoiding subscriptions that require regular payments like gym memberships and streaming services and minimising gambling and cash withdrawals.

Finally, be careful with your finances

Create a budget and stick closely to it to build some savings. Don’t approach lenders before you have saved some amount and have reduced your existing debt. By taking all of these steps, you’ll significantly increase the chances of your loan application getting approved.

Consider a co-borrower (guarantor)

A co-borrower is another person who takes out the loan with you. This means they’ll sign their life away and be responsible for repaying the loan if you can’t.

Typically, a co-borrower is someone with full-time employment and a good credit rating.

Due to a co-borrower’s solid financial situation, they can often attract lower interest rates and increase the chances of approval.

A parent or family member is a common choice.

Apply for a car loan with us today!

apply with us

You can certainly repair your credit situation, pay your debts and reapply for a car loan after being declined. However, it can take some time.

Credit scores and credit history can be repaired with good money management. If you struggle, talk to a finance professional.

Need a car loan immediately? Loans for People with Bad Credit is a good option.

At Loans for People with Bad Credit, we specialise in helping people with bad credit obtain car financing. We have access to several leading and trustworthy lenders.

Furthermore, our team is able to match you to a lender and assess your circumstances without affecting your credit report. This means you’ll know your options before applying.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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