If you've been rejected for car finance, we sympathise. It's a setback, for sure – but it's not always the end of the story.
Before we go any further, there's one essential point to make. If you've just been refused car finance,
don't immediately apply again.
That's because making lots of applications in a short period can affect your credit score. And the worse your credit score, the harder it is to get finance in future.
Here at Zoomo, we aim to help drivers in the North East access car finance, no matter their credit rating. We believe that a low credit score shouldn't be a significant factor when looking for a car – whether for work, leisure or other commitments.
So, what should you do next?
Here are seven concrete steps you can take.
Steps to take after a car finance rejection
1. Check your credit reports
It's possible you were rejected because of an error in your credit file.
To find out, get a copy of your credit report from the three main credit reference agencies (Experian, Equifax and TransUnion). Look for any of the following:
- Wrong addresses
- Missed payments that you actually paid
- Outdated financial links (for instance, a link to someone you used to share a bank account or mortgage with)
If there are mistakes, get them corrected. This might help your next application.
2. Find out why you were rejected
Credit applications are like job applications – you can always ask why you were turned down.
The most common reasons that applications are rejected are:
- A low credit score
- Records of missed payments
- Failing to meet an affordability check
So, ask! That will tell you whether you were rejected because of a low credit score (your financial history) or the affordability check (your current financial situation).
Once you know this, you're in a better position to make changes ahead of your next application.
For instance, if the issue is your credit history, you can do all you can to make your next lot of payments on time. You can also register to vote if you haven't already, as this can improve your credit score.
If affordability is the issue, things are a little tougher. It might mean working more hours or trying to secure a better-paying job. That's hardly easy – but at least you'll know where to start making changes.
3. Wait
In a way, this is the most important step of all. If you apply soon after a rejection, you could negatively impact your credit score.
Why? Because a lender will look at your credit score and see that you were rejected. This is a red flag to lenders who, above all, want their money back.
There's no legal waiting period. There's nothing stopping you from applying again straight away. But it's better to wait at least 30 days – and ideally, three to six months. This lets the dust settle on your application and means your credit file will reflect any positive changes you've made.
4. Save a deposit
Saving is difficult – especially if your application was rejected because of affordability. But if you can save a deposit, you increase your chances of getting accepted in future.
That's because the bigger the deposit, the less the lender has to lend and the less risk they take on.
5. Apply for a cheaper car
It may be that you applied for a car that required too big a loan from the lender. You can attempt to remedy this by picking a less expensive car. This will lower the monthly payments and could help you pass the lender's affordability checks.
6. Use soft searches
A direct application for car finance is a hard search, which leaves a black mark on your credit file. Where possible, look for brokers or lenders offering a soft-search eligibility checker.
This avoids multiple searches that can negatively impact your credit file. Instead, you get to gauge your chances through a soft search before committing to an application.
That's one of the key advantages of working with a car finance broker like us rather than going directly through a lender.
7. Work with a bad credit car finance broker
A car finance broker is like a comparison site. You can access a wide panel of specialist lenders rather than finding them yourself one by one.
These lenders are known for lending to people with bad credit. They'll consider your current affordability as much as – or more than – your credit score, defaults and County Court Judgments (CCJs).
This helps protect your credit score. A car finance broker will use soft credit checks to find out your eligibility, leaving no trace on your credit score.
This can help avoid what's sometimes known as "rejection spirals". This is where a driver makes lots of direct applications and gets rejected again and again. A broker will instead find an appropriate match before you agree to the formal application.
And because the car finance broker has existing relationships with these lenders, you're not wasting time applying to lenders who won't consider your application.
So, if you've been rejected for car finance, your best bet is either to:
- Wait and rebuild your finances
- Or approach a poor credit car finance broker for help
Can car finance help improve my credit score?
If you get a car finance agreement and make consistent monthly payments, you can steadily rebuild your credit score over time. This will make it easier to apply for other kinds of finance in future.
Why are car finance applications rejected?
There are four main reasons why car finance applications are rejected. These are a poor credit score, affordability issues, application errors and the kind of car you apply for falling outside the lender's policy.
Zoomo specialises in securing
bad credit car finance in Newcastle. Have you been rejected in the past and want to know your chances today? Try our
eligibility checker. It only takes a minute, and it won't affect your credit score at this stage.
