What If My Car Finance Is Approved And Later Declined?

Car finance can be a lifeline if you need a new vehicle, but can’t afford to buy one outright. However, it doesn’t come without its challenges.

While it doesn’t happen often, it is possible to have car finance approved and then subsequently declined 😔

This can happen for various reasons, from changes in your credit status between when you originally applied and when the lender conducted a full credit check to issues during the finance agreement process.

Whether you’ve been approved and then declined, or you simply want to guarantee acceptance of car finance when you apply, we’re here to help 😀

In this blog, we’ll explore the reasons your car finance may not be approved. We'll also reveal how to deal with it if your loan approved in principle is later declined.

Got a specific question? Why not jump to:

My car finance was approved then declined

When you receive news that your car finance has been approved and then later declined, it can be a real blow.

This situation often occurs unexpectedly, after an initial approval or even a formal acceptance of car finance.

Understanding the terms and conditions of your finance agreement is crucial, as these may hold clues to the reasons behind the sudden change.

You can also check you haven’t applied for more finance than you can afford. For example, with Carmoola we make it easy to calculate your budget before you apply.

Common reasons for car finance approved then declined

Having your car loan initially approved and then declined can understandably be frustrating. However, there may be a solution depending on why the finance was declined.

Here’s some of the most common reasons car finance may be initially accepted and then refused:

Change in your credit score

A dip in your credit score after the initial approval can concern lenders.

Credit scores reflect your financial reliability, and any negative changes may suggest an increased risk to the lender.

Change in employment

Losing your job or experiencing a reduction in income can significantly affect your finance application.

Lenders reassess your ability to make regular payments when your financial circumstances change.

Debt-to-income ratio

Taking on more debt after your initial application can alter your debt-to-income ratio, which is a key factor lenders consider.

This could make lenders doubt your ability to handle additional monthly payments.

Inaccurate or incomplete application

Any discrepancies or omissions in your application can lead to a decline upon further review.

Lenders rely on accurate information to assess your financial situation.

Lender's internal policy changes

Sometimes, lenders revise their credit policies or risk assessments.

If these changes occur after your initial approval, they can affect the final decision on your finance application.

Understanding these reasons can help you better prepare for or respond to a reversal in your car finance approval.

More car finance and credit guides

Dealing with declined car finance

Once you understand the reason behind your declined car finance, there may be steps you can take to rectify the issue.

For example, you may be able to work on improving your credit score or updating and correcting any errors on your application.

As well as resolving any potential issues, you may find it useful to explore other avenues.

Different lenders have varying criteria for approval. So, what causes one lender to decline your application may not be an issue with another.

Seeking advice from a financial advisor can also help you discover alternative options like advantage finance settlement or the different types of loans available.

At Carmoola, we provide a soft search eligibility check for pre-approval. The pre-approved budget is the amount we will be able to lend once we've verified all of your information. This figure is subject to further checks and doesn't mean you’re guaranteed to be accepted. However, once you actually apply, we carry out a hard search which may impact your credit profile.

The hard search may reveal potential problems that weren’t disclosed in the soft search. This is the most common reason you may be declined after pre-approval.

We recommend learning about our process before you apply.

If you need any clarification on your finance decision, don’t hesitate to get in touch with our friendly team 😊👍

FAQs About Getting Declined for Car Finance:

Does getting declined for car finance affect your credit score?

Getting declined for car finance doesn't directly affect your credit score. However, the lender's credit check during the application process can leave a mark on your credit history.

Can you apply for finance after being declined?

Yes, you can apply for finance again after being declined, but it's advisable to understand why you were declined and improve those areas before reapplying.

What should I do if my car finance is approved in principle but later declined?

You should find out why you were declined, then work on rectifying the issue. It could be you made an error on the application, or you may need to improve your credit score.