6 reasons a car loan is refused, and what to do next
Most refusals are due not to the amount of income itself but to history and borrowing limits. For each reason we set out realistic next steps.
When a car loan is refused, you are usually not told why. But from the consultations we receive, the cause generally falls into the following six.
1. A record of late payments or debt restructuring
While a record remains in your credit information, credit-company screening almost automatically stops. The record does not stay forever, but if you cannot wait, an in-house loan can be an option.
2. A short time with your employer
Right after changing jobs, you can be judged by length of service alone even if you have an income.
3. Work seen as having an unstable income
For self-employed people, freelancers and commission-based jobs, stability matters more than the amount.
4. No room left under the total-amount cap
The amount an individual can borrow is limited to one third of annual income. If you have other borrowing such as a mortgage, there may be no room left for the car.
5. Age
You can fall outside the conditions whether you are too young or whether your age at the final payment would be too high.
6. The details of the application cannot be verified
If the entries for your employer or income cannot be backed up, the procedure simply stops.
Options after a refusal
Increasing the down payment, lowering the price of the car, or waiting a while are all effective, but they are not always realistic if you cannot get to work without a car. CarMax's in-house loan is a system for people in exactly these cases to come and talk to us.