Having covered different employment scenarios and listed how we can help secure a car loan, we thought it about time to show you what can prevent you getting a car loan.
You can access credit as a seasonal worker, as a freelancer, as someone rebuilding credit and someone who has only just started a new job. You do have some responsibilities though if you want lenders to take your application seriously.
Avoid doing these four things if you want a car loan in the near future.
Frequently changing jobs
Many lenders can handle part-time work, tip work, seasonal work and even freelance work. What they are more nervous about is someone who changes a full time role too frequently.
We all know that a job for life is a thing of the past but changing a permanent role too often can work against you.
That doesn’t mean you cannot chop and change until you find the perfect fit. What it means is creating a history of staying in a role for a few weeks or months.
Missing payments for any reason
All debt is a responsibility. Whether that’s a phone, broadband, mortgage or car loan. If you borrow money, you have to pay it back on time, all the time. Nothing makes a lender more nervous than someone who misses payments without good reason.
Missing payments through no fault of your own when you have discussed it with the lender is different. Here we’re talking about forgetting or missing a payment without having agreed beforehand with the lender.
All lenders understand that life happens and that you may have to miss a payment now and then. What they won’t understand is not agreeing it with them beforehand.
Already having high debt
The key to securing a competitive car loan is affordability. Can you afford to pay the loan every month over the term without getting yourself into trouble? If the answer is yes and you can prove it, you should get a loan.
If you cannot prove it or are already juggling lots of debt, you will have a harder time qualifying for a loan.
Too many hard enquiries on your credit report
Credit report enquiries come in two forms, hard and soft. A hard enquiry happens when you apply for credit in any form. This remains on your credit report and is taken account of by potential lenders. Soft enquiries are for things like car insurance quotes, pre-qualification and the like. They do not remain on your report and are not taken into account.
Too many hard enquiries makes it look as though you are applying for multiple loans at once. This will give a lender pause as it potentially increases the risk of defaulting.
Be very careful when shopping around for car loans and make sure to only apply for the one you really want. This will avoid those hard enquiries that can impact a car loan application.
If you need help with any aspect of car loans, contact us today. We can help!