What If My Car Finance Is Approved And Later Declined?

Oh no! This is the worst news! 😮 And just as you were getting so excited about owning your dream car.😔 For those of you who now find yourself in a situation where your car finance was approved then denied -  this article is for you! We'd love to help. We’ll try to shed some light as to why this happens to some people who apply for car finance. You’ll also learn more about the car finance decision process and  what you can do after finding out you got a declined car finance application

Why My Car Finance Got Accepted Then Declined

In some cases, car buyers go to a car dealership where they apply for car financing. What many don’t know is that their application may actually go to several lenders, not just one. Most car dealers are connected with various lenders, and it’s most likely that the information you provide them will be sent to these lenders. Car dealers do this to see whether you qualify amongst those lenders.

If you were told that you got approved for car finance but later, you receive information that the application was actually declined, there may be two reasons for it. 

Multiple Car Finance Applications

Let’s say that you applied for car finance at a car dealership and it was then sent to multiple lenders. One may approve your application while the rest declined it. With the lender where you got approved, you will be able to purchase the car. 

However, for the rest of the other car finance companies that declined car finance to you, they are still obligated to inform you of their decision. If you receive a letter that states that your application for car finance has been declined, check the name of the financing institution. It’s possible that it’s not the same lender where you got approved. 

Beware of “Yo-Yo” Financing

For the first scenario, you only need to check the details of the letter about the lender’s decision. It’s nothing to worry about and you still get to buy the vehicle. But in this next scenario, you have to be careful not to fall into “yo-yo” financing. What does it mean exactly?

This situation happens when you buy a vehicle and take it home even if the car finance process is still pending. There are some car dealers that allow buyers to do this despite the fact that the financing is not yet final. Mostly, things go smoothly, however, there are also instances when the car financing doesn’t push through. 

If you’re in a situation where you applied for car finance and took the car home even when the whole process has not been completed and finalised, you may face a tough decision. It’s possible that the terms of the loan will be changed and it will be different from what you’ve agreed to. You would have to accept this new agreement if you wanted to keep the vehicle. But if you don’t want to accept the changes, it will be necessary for you to return the car. 

You can avoid this scenario by keeping in mind not to take the car home from the dealership until everything about the car finance process is complete and final. Every document should be read, understood, and signed. And when something’s unclear, never hesitate to ask the person handling the car financing process. 

Common Reasons Why Car Finance Was Declined

There could be several reasons why your application for car finance was declined. It’s possible that the amount you were applying for was more than what you could afford to repay. Maybe you have a poor credit score or submitted incomplete requirements. While these are common reasons why lenders deny car finance applications, there are still others that you ought to be aware of. 


So many car finance applications get rejected because of the mistakes on the documents. See to it that you’ve filled out everything and that you’ve supplied the lender will all the essential details such as your identity, address, employment, income, etc. Before submitting your application, check your answers. 

Credit History

An applicant’s credit history is a significant indicator of his capacity to repay a loan. Your credit history will include information such as credit enquiries, outstanding debts, overdue accounts, and past bankruptcies. Before applying for car finance, it's advisable to check what your credit score is, as well as the requirements of the lender. 

Employment History 

The details of your employment and income are major factors that lenders consider before they approve your car finance application. Maybe your income is not sufficient to repay a loan yet, you’ve just been hired, or your employment situation is unstable. Lenders will consider your case as high risk. See to it that you establish your employment history first so you will have a stable income to make the payments when you do get approved for car financing. 

Car Finance Declined in the UK? 

What to do if your car finance application got rejected? Here are three steps that you can take before submitting another application. 

Ask the reason why

You simply need to ask the lender why they declined your application for car finance. Once you know the reasons, you will have an idea of how you can do things differently when you try again. 

Begin your research

Don’t lose hope if you didn’t get car financing this time. Once you receive the news about the lender’s decision, begin your search for other lenders. However, keep in mind not to submit another application too soon. Consider the reasons why your application got rejected. Give yourself a year to improve your credit rating, establish your income, and make sure you meet all the requirements. Applying too soon to several lenders will damage your credit rating. 

Save, save, save

While you’re waiting for the next opportunity to get car finance, you can plan on how you can save a good amount of money that you can use for paying the downpayment. If you do this, you don’t have to borrow the full price of the vehicle you want to buy. It means lower monthly payments and more affordable interest rates

Questions on Car Finance? Check out the Carmoola Blog!

Hopefully, this article has provided you with useful information on why your car finance application got rejected. If you want to know about car finance deals from Carmoola, reach out to us! And before you make lots of applications for car finance, it's wise to go down the route of a pre-approval which will only involve a soft credit search - so certain not as damaging as applying to multiple lenders because you are rejected. We’re here to help you get the car you want. 😀