What happens if a car loan isn't approved?

I'm trying to refinance my car loan, but my application got denied. What should I do now?

I’m so sorry to hear that! First, ask your lender why your application was denied. Car loans usually get denied for one of the following reasons:
  • An existing lien on the car
  • A low credit score
  • A high outstanding debt balance
Each of these things is fixable, though some may take more time than others. Depending on the problem, these steps can help improve your chances of future loan approval:
  • Check for existing liens on your car if it’s used. Title issues like this can prevent loan approval.
  • Improve your credit score by making payments on time. Late payments and missed due dates will harm your credit, which makes it much more difficult to take out new loans.
  • Lower your debt-to-income (DTI) ratio. This will require a lot of budgeting and saving, but it’s doable! Since you already have a car loan, paying your principal will help you out a lot.
One way to make things financially easier is lowering your monthly bills. Check out the Jerry app to learn about your car insurance options. You may be paying too much for insurance you don’t need!
Liz Jenson
Answered on Nov 11, 2021

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