When you see a hot new ride that you're dying to own, it's simple to take the next step by applying for a car loan. However, things can get complicated when that loan is unexpectedly denied. It's natural to feel discouraged by this denial, but you don't have to let it be the end of your quest for the perfect ride. There are a couple of things you should do when you are denied for a car loan. Read on to find out how you can take positive action even in the face of a denial.
Determine Why The Denial Happened
According to the law, you are entitled to know the reason for the auto loan denial. This will be issued in the form of a letter in the mail that will arrive anywhere from a few days to a few weeks after the denial. The problem with these letters is that they are typically quite vague. For example, a denial letter may state that delinquent accounts were the reason for denial. However, it won't specify which accounts are delinquent or how much money is owed to those creditors.
To find out more about the denial, contact the lender. Explain that you got the denial letter, but you need some clarification if possible. Lending officers can often give you some very helpful information, since they have access to more information than the letter reveals. The officer may be able to identify specific problems with your credit, and may even be able to give you some advice about changes you can make to get approved when you apply again in the future.
Request a Copy of Your Credit Report
You are allowed to order a free copy of your credit report from each nationwide credit reporting company once a year. The main three companies that issue credit reports are Equifax, TransUnion, and Experian. However, even if you have already ordered free credit reports from all three companies in the last year, you are still entitled to another free credit report due to your recent denial.
Once you have received your denial letter, you must contact the credit reporting agency used to determine your denial within 60 days to request your free credit report. Every company has a specific way to make this request, which should be outlined in the denial letter that you received in the mail.
Your credit report is the most helpful tool in determining why you were denied for a car loan. Whether you have charge-offs (debts that were never paid) or delinquencies, make note of any money that you still owe. Make arrangements to pay the debts off as soon as possible, even if you have to do so in installments. This should, over time, improve your credit rating enough to allow you to qualify for a car loan the next time you apply.
While not getting the car loan you need is upsetting, remember that it's only a temporary setback. With some time and effort, you'll be behind the wheel of your new ride sooner than you would have ever thought. For more information, consider contacting lenders like Saginaw Medical Federal Credit Union.