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Why car financing is refused and what to do

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06 May Why car financing is refused and what to do

Refusing to finance your car can put a damper on your car ownership dreams. But there are steps you can take to correct the problem. Whatever is holding you back car financing question, from bad credit or affordability, to the age of the borrower or the type of car, take a look at some of the most common reasons why car financing is rejected and what to do about it.

Credit score

Your credit file is an important part of any credit application you make. It contains a history of your financial transactions, including all credit applications that have been approved or denied in the past, and a history of repayments, including defaults, delays or missed repayments. All of this information makes up your credit score, a ranking that lenders use to determine how likely you are to pay off your debt on time.

A poor credit score could mean your car loan is being turned down, and you may need to spend some time improving your credit score. Here are some ways to do it:

If you need extra funds to meet your financial needs, tell us about your options for a bad loan. By paying off a bad loan you demonstrate your ability to manage repayments which could help strengthen your credit profile.

Convenience issues

Affordability is understandably an important consideration for auto lenders. If your expenses exceed your income, or the lender feels that you simply don’t have enough left over to cover the cost of car loan repayments once all bills have been paid, your car loan application is unlikely to come. approved.

If you are struggling to make the figures work for you, you may need to consider how to increase your income or reduce your expenses. Another option is to have someone acting as a co-borrower – a partner or family member who can apply for a car loan with you so that your joint income is used in your application to determine affordability.

Driver’s age

Age is another factor that can impact the success of a car finance application. Typically, the younger you are, the harder it is to get car financing approval. This is because most New Zealand lenders have an age limit for lending, and only a small handful will consider lending car finance to borrowers between the ages of 18 and 21.

Another reason age may be a factor is that it takes time to build a credit history and credit score, and being younger means there is less chance of applying for credit and less time to pay off debt for. build a good credit history.

If you are under 21, it may be necessary apply for car financing with a co-borrower or guarantor, someone who can guarantee that your car loan will be repaid and is required to repay your loan if you are unable to do so. Or alternatively, a cash deposit may be required.

Vehicle type

Finally, the type of vehicle being financed and its age will influence a car financing deal. For example, an older car that may not be equipped with the latest safety features might be viewed by lenders as too risky, while a high mileage vehicle generally equates to higher repair and maintenance costs, which could drain a borrower’s finances and impact their ability to meet their repayments. Many lenders are also reluctant to approve race or rally car financing due to the level of risk involved.

Talk to a Max Loans personal loan advisor about the type of vehicle you would like to finance. We will listen to what you need and do our best to match you with a suitable loan option.

A successful car finance application

If you’re ready to upgrade your old car to something newer, or are in the market to buy your first car, car financing could help you buy your dream car much sooner. To ensure the best success in your car loan application, get in touch with the Max Loans team today and let us help you compare New Zealand loans broad to find the best solution!

Apply now

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This article was published by: Rachael Alexander by title: Why car financing is refused and what to do


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