How to Stop Yourself from Getting Burned Out by Car Loan Denial
What would happen if you exercised intensely, 7 days a week, for 3 hours a day? Perhaps, lifting heavy weights, swimming countless laps or playing pickup basketball or soccer non-stop until you dropped. Unless you are an elite athlete or fitness buff, you’d probably burn out pretty fast. But here’s the funny thing – people who have been denied an auto loan on multiple occasions do the same thing. They allow themselves to get fatigued by constantly seeking approval for a loan, getting rejected, and doing it all over again. They take no breaks or make no effort to switch up their strategy. Does that describe you? If so, it’s worth knowing what you can do to avoid such burnout.
If your parents raised you to have a “no-quitter” attitude, you might have a hard time accepting the advice to take things slow for the time being. But you don’t want to be like a trapped housefly trying to break through a window – at some point, you have to find another way. It’s safe to say that many people who try to get approved for a car they can’t afford, are often the ones who suffer the most mentally. Hopefully, you won’t have to go so far.
At first, surprise or disappointment are the usual emotions that arise when someone is denied an auto loan. You might relate to this. If you thought you had good credit all along, it can be very upsetting to know the loan you wanted so badly is now off limits to you.
Frustration and anxiety hits harder when several lenders deny you. At this point, you might start to get more desperate, especially if you really need a car that can help you carry out your routine. Such negative feelings often get worse when the lenders reveal what you would actually qualify for – financing for a less desirable vehicle, and terms that offer less flexibility.
And of course, if it keeps happening, that’s where the “burnout” sets in. You might get to that point where you fall into a pattern of applying over and over again, but getting approved for nothing. When you hit this “rock bottom”, it’s time to change your approach.
Why the Run-Around Happens
Too many people who get rejected for auto loans make the same mistakes repeatedly. And it’s unfortunate to see since the causes of their problems are sitting right in front of them. Again, if you’re having problems getting approval, you need to look deeper at your finances and your goals themselves.
Avoiding a Credit Check
If you’re having a bad streak, the first thing you’d want to check is your credit. It’s not the end-all and be-all of car loan approval, but if you’ve got a history of late/missed payments, collections and other items on your profile, you will without a doubt have difficulties getting approved for a loan. Your score can take a dip after a major life event, or it could occur gradually without you realizing it. That’s why it’s important for you to check on your credit, perhaps even before seeking approval for a loan.
Sometimes it’s not so much credit difficulties that keeps someone from getting a loan. In many cases, the person who wants a car is applying for a loan that they simply can’t afford. For example, they might qualify for just about any affordable brand out there, but instead show interest towards a luxury or sports car that a lender deems as out of their range. You too might have this experience where you want a high-end vehicle, but can’t get approved for the loan that would finance this vehicle. You have to keep in mind that lenders are looking at more than just your credit score – they’re also considering the likelihood in which you’ll be able to make payments (more on this later).
Applying to the Wrong Lenders
Depending on your credit situation, you may need to look out of the prime market and go for subprime lenders. Failing to do so will prove miserable for you. In reality, there are very few people who can get absolutely no financing, but they are rare. So it’s all about focus. There are alternatives out there if you discover you have poor or limited credit (that is, a person who doesn’t have much if any credit history), such as a loan designed for those who struggle with credit issues.
In Need of Consideration
If you’re on the verge of burning out because of car loan troubles, there are a few factors for you to consider. A deeper look at these issues may help you see the problem with your application. And from there on, you will see what route to take, instead of mindlessly applying for the same loan over and over again.
When Approval Fails…
- Check your credit report – Keep tabs on your credit report. Obvious reports of bankruptcy, repos and foreclosures won’t sit well with lenders, and that will deter them from giving you a loan. Also be on the lookout for credit errors. Mistakes do happen during the reporting process, and if you see something that looks like an error, you should dispute it.
- Look at your debt-to-income ratio – This all boils down to budgeting. A lender will consider your income in comparison to the amount of debt you hold. But that’s a task you can do yourself. Be realistic. If your debts outweigh your earnings and the monthly payment for that car will be too high, then it’s probably best to look for a smaller loan.
- Employment status – This is a bit tricky. Lenders are interested in your employment status because it can influence your ability to pay a loan. For example, being on probation may lead to a rejection because there’s no guarantee that you’ll be a permanent employee. Also if you have a job history that shows frequent switching, a lender may see that your income is unstable, and feel hesitant to grant you an approval for a loan.
Know When to Stop
It’s tempting to keep on going despite getting loan rejections, and it’s an admirable trait to have. However, slowing down can actually work in your favour. After all, a string of loan rejections is a sign that something serious is affecting your credit, and you need to address it. You should focus your attention and energy on checking your profile to see what the problem is, and work around it so that you can rebuild it. If you already know what the issue is, you’ll have to think about alternatives, such as a car loan for bad credit. Whatever you need to do, set realistic expectations for yourself when applying for a car loan. You’ll spare yourself from further disappointment.