Why You Didn’t Get A Car Loan
When you apply for a car loan and are denied it can sometimes be difficult to understand why your application was refused. Sometimes the denial comes from simple mistakes like accidentally skipping over a required line on the form. These sorts of rejections are easy to fix with a new application. Of course, there are more complicated factors involved in whether your car loan is approved or denied. If you’ve been in a previous at-fault accident, this can influence your insurance rates and a few other aspects of your loan application.
Seek Legal Counsel
If you do not believe you should be considered at fault in the accident, the first thing that you should do is reach out to a legal professional. When looking for an attorney, always ensure that you select someone who specialises in the particular type of law you’re dealing with. In this case, you would be looking for a lawyer who deals with car accidents. It is also important to note that laws vary from state to state, so you should be looking for an attorney with experience in the state where the accident occurred. For example, if the accident occurred in Texas, you might search for Houston car accident lawyers. The law is a complicated thing, even for those who have been practicing it for years seek out legal advice when they’re involved in a legal proceeding outside their area of expertise.
Your Credit Score Is Still The Most Important Thing
When it comes to securing a loan, no matter what your previous history is, your credit score is still going to be the most heavily weighted piece of information. There are a number of things you can do to improve your credit score, although the majority of these things take consistent effort over a period of time. If you cannot get a car loan, your credit score is likely going to be where your effort needs to be allocated. In the meantime, you may have to settle for a less expensive vehicle that you can purchase without a loan.
DTI Ratio: Are You Still Paying For Your Totalled Car?
Many people are disheartened to learn that just because your car was totalled, this doesn’t mean your payments can stop. Most people still need to pay for their car, even if it has been deemed unusable and damaged after an accident. This can mean that sometimes people end up paying two separate car loans at the same time.
If this is the situation you are finding yourself in, additional financial considerations need to be made before you even begin searching for a car loan. Sometimes car loans can be rejected because you have too many other loans you are currently paying for, this is often described as your debt-to-income (DTI) ratio. If your ratio is unfavourable, you might have to seek out a less expensive vehicle that you can either pay for without a loan or that requires a significantly smaller loan than the one you are seeking at the moment. Used car loans are often more manageable and so will be easier to acquire.
Reach Out To Several Lenders
Each car loan provider calculates risk in a slightly different way. Just because one institution rejected your application, does not mean that all of them will. You can (and should regardless of approval or denial) apply for pre-approval or for loans from various institutions. Even if you get approved by your first choice, it is still in your best interest to understand the different loans available to you. Some might have lower interest rates. Some might have better terms when it comes to the length of the loan.
The above points will help get you started with securing a car loan after an at-fault accident. Of course, everyone’s financial situation is going to be a little different, and because of this, no online financial advice is one-size-fits-all. If you are unsure about the choices that you are facing, it is advisable to speak to a financial professional. There are circumstances where car loans can be the correct choice, but there are many instances where car loans are not advisable.