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Getting your car loan denied by your bank hurts, but your plans aren’t over. The bank judged your file against its own criteria, at one specific moment. With the right steps, your next application can be much stronger. Here are the causes, the first steps to take and how Financementauto.com can help, in Saint-Jérôme and Sainte-Agathe-des-Monts.
Every lender sets its own criteria, and banks are often cautious. In most cases, the refusal comes down to one or more of the following:
According to the Financial Consumer Agency of Canada (FCAC), the total debt service ratio includes all your debts. Car loans and credit card payments are part of it. These ratios help lenders determine how much additional debt you can handle.
In Quebec, the Office de la protection du consommateur (OPC) points in the same direction. A merchant who enters into an instalment sale contract with you must evaluate your ability to pay. Among other things, it considers your income, your housing costs and your payments on other credit.
First, ask the lender why it said no, ideally in writing. Also find out which credit bureau it checked. That answer shows you exactly what to work on.
Next, get a copy of your report. The FCAC says you can get your credit report online for free from Equifax and TransUnion. These are Canada’s 2 main credit bureaus. Don’t worry: according to the FCAC, checking your own credit report or score won’t affect your credit rating.
Read every line of your report carefully. The FCAC suggests watching for mistakes such as a wrong address or date of birth and an incorrect payment history. Accounts you didn’t open can even be a sign of identity theft.
You have the right to dispute any information you believe is wrong. What’s more, credit bureaus must correct errors for free. Gather your proof, such as receipts or statements, then contact Equifax and TransUnion. Reaching out to the lender directly may also speed things up.
Unhappy with the outcome of the investigation? You can then add a short consumer statement to your report at no cost. The FCAC explains the full process to check your credit report for errors.
After a no, the reflex is often to apply everywhere, as fast as possible. However, the FCAC notes that too many inquiries close together may make lenders think you’re urgently seeking credit. It recommends avoiding multiple applications at once or too close together.
For a car loan, however, the FCAC recommends getting quotes from different lenders within a 2-week period. Credit bureaus then treat these as 1 inquiry. Its tips for improving your credit score are also worth a read.
Once your report is up to date, several levers can make your application stronger:
On the debt side, the FCAC recommends using less than 30% of your total credit limit. It also says payment history is the most important part of your credit score. So every on-time payment counts.
As for a co-borrower, this person co-signs the credit agreement. According to the FCAC, they become equally responsible for repaying the unpaid balance. It’s a serious commitment for the person helping you.
If your credit has taken a hit, 2nd chance auto financing may be a serious option. This type of financing is for people who have dealt with late payments, a bankruptcy or a consumer proposal. Many specialized lenders look at your current situation, not just your past.
Terms still depend on your file. So take the time to read the whole contract before signing. Have you already filed a consumer proposal? Our article on auto financing after a consumer proposal walks you through the steps.
At Financementauto.com, a real person reviews your actual situation, not just your score. We offer regular auto financing and 2nd chance financing. We inspect our pre-owned vehicles of all makes before sale. You’ll find us at 155 Lachapelle Boulevard in Saint-Jérôme and 301 Léonard Street in Sainte-Agathe-des-Monts.
To get started, fill out the online specialized financing request: it takes minutes and commits you to nothing. Write down the reason for the refusal and keep your credit report handy. You can also browse our pre-owned inventory to find a vehicle that fits your budget.
There’s no single rule: every lender has its own criteria. First, take the time to fix any errors and pay down debt, if you can. When you’re ready, group your applications within a 2-week period, as the FCAC recommends.
No. According to the FCAC, checking your credit report or score won’t affect your credit rating. So review it with peace of mind before your next application.
It’s possible, since each lender assesses files according to its own criteria. A dealer that works with several lenders can also submit your file to the most suitable one. That said, no answer is guaranteed in advance.
