You’ve discovered the perfect used car and can already picture yourself behind the wheel, but unfortunately, your Car Loan request gets rejected. It’s a letdown, but do not worry. Many borrowers face this bump in the road. To get to the bottom of why your Car Loan application was rejected, understand the possible reasons and how to correct them.
1. Poor credit score
Mistake: Your credit score is low, which often results in loan rejection.
Solution: Pay off existing debts, pay your EMIs regularly, and avoid new credit inquiries before applying for a Car Loan.
2. Bad debt-to-income ratio
Mistake: You have a significant amount of debt compared to your income, which signals to lenders that you might struggle with additional loan responsibilities.
Solution: Pay existing debts to lower your debt-to-income ratio, before applying for a Car Loan.
3. Less income
Mistake: You do not have enough income to meet the lender’s minimum requirements.
Solution: Provide proof of stable and sufficient income. Consider additional income sources or get a co-signer to strengthen your application.
4. Small down payment
Mistake: You pay a small or no down payment, which might alert lenders.
Solution: Save up for a larger down payment to reduce the loan amount.
5. Incomplete loan application
Mistake: You submit an application with missing or incorrect information.
Solution: Complete your application fully and double-check for accuracy before submission.
6. Frequent job changes
Mistake: You keep jumping jobs, thus making lenders hesitant to approve your loan.
Solution: Show proof of steady employment history and provide explanations for any job changes, especially if they led to better opportunities or higher income.
Also Read: What is the minimum CIBIL Score required for a Car Loan?
Conclusion
Having your Car Loan application rejected can be disheartening, but understanding the reasons behind it is the first step toward finding a Solution. Inadequate credit history, insufficient income or employment stability, and a high debt-to-income ratio are common culprits behind loan rejections. By addressing these issues proactively and improving your credit score, stabilising your income and managing your debt responsibly, you can enhance your chances of securing a Car Loan in the future. Remember, persistence and financial discipline are key on the road to Car Loan approval.
Axis Bank offers Used Car Loans, with amounts starting from ₹1 lakh, with up to 95% of the valuation amount for sale-purchase and up to 85% for refinance loans. The tenure for these loans can last up to 5 years. Apply for a Car Loan with Axis Bank and drive your dream car with confidence!
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
