Why Has My Application For Car Finance Been Declined?

Oh no! Your offer on that lovely new car was accepted and now you are having trouble getting the money to pay for it! 😩 Have you ever been turned down by car finance companies? Being refused and then rejected for car finance is upsetting and really annoying, more so if you don’t have any idea what went wrong with your application. But there are a lot of reasons why an application could be declined. 

The best thing to do after your application is turned down is to find out the reasons why and address the issues head-on, in order to successfully obtain car finance in the future. It is necessary and a really good idea to settle the issues first, before rushing off to the next credit company. The danger is you might be rejected again and then get into a spiral and thus seriously damage your credit score.

There could be different or even combinations of reasons why your credit application has been declined. Try to identify the problem if you can. Here is the list of common reasons so you can get an idea of the possible issues with your application.

Credit Report Information

Your credit history says a lot about your financial situation. Car finance companies usually look into your credit history to determine how you handled your past borrowing, whether you have an account of missed payments, or have any outstanding debt. A credit report is one of the things that car finance companies consider in your application. If you have a really poor credit history, that will likely result in the refusal of your car finance application. 

Discrepancies and errors in your credit record can also be problems that can negatively affect your score or rating. You might have recently paid loans that might not still reflect on your account. Bank errors, bogus activities, and financial products that you didn’t apply for might be listed under your name. Do check on these before you apply for car finance. Contact Experian or one of the other credit reference agencies for help.

Even a seemingly innocent discrepancy of detail like an out of date address, or using an address that you didn’t live at, can affect your application. Therefore, it would be logical to constantly review your credit report and make sure that the information you have listed is up to date as it can be.

And it's especially important to do this before applying for car finance. If you found errors on your credit report, you can enquire about it through the company or credit reference agency and ask for an updated record.

Multiple Applications

Making many car finance applications in a very short time will likely leave your credit report with a search footprint, even though you didn’t push through with the application or were refused.

Multiple applications can create an impression that you are having a hard time managing your current financial obligations and that you desperately try to get as many loans as you can. This action will significantly decrease any chance you have for car finance. 

Subscriptions and financial products such as mobile phones, digital TV contracts or subscriptions, buy-now-pay-later arrangements, and instalment plans can be counted with your other loan applications. It is ideal to wait for at least three months before making another car finance application. If you apply elsewhere and if you get refused again, it will likely further sabotage the possibility of getting approved in the future.

Excessive Credit

In spite of having a good credit record, it is still possible that your car finance application will be turned down. Car finance companies may question your ability to pay if you have multiple loans, or high outgoings compare to your income,  even if you have managed your credit commitments well in the past, without a hitch.

Finance companies might also turn down your application, not because of your total existing debt, but because of your overall potential debt. Maxing out all of your current credit lines may eventually cause a problem, and car finance companies are keen to protect themselves by rejecting your application. You may opt to close those credit accounts that you no longer use to minimise the chance of being tempted to incur excessive credit.

Insufficient Credit History

If too many loans could cause you refusal from car finance companies, so is the lack of a credit record. Finance companies tend to be hesitant to give credit to applicants without a credit history to back them up. Lenders assess if you’re a responsible client based on your credit background.

If it’s your first time borrowing, then there’s a possibility that you’ll be rejected since your credit history is not strong and impressive enough to guarantee the lenders. But the moment you can prove to them that you can pay on time and borrow within your limits, they will be more inclined to approve your application.

Some finance companies have specific requirements that you need to be aware of to avoid getting rejected. Some require that the borrower have credit management experience of at least a couple of years to be eligible for car financing. You can acquire the necessary experience through your credit cards, other loans, and mortgage, and by making sure each is paid on time.

If you think you might come under this heading, the good news is that spreading the cost of your purchase with Carmoola might be the option for you. We use a check called open banking, which with your permission can be done instantly, and if we can see you are managing your monthly accounts well with scope for borrowing, then your lack of credit history might not be a bar to getting help.

Financial Connections

Sometimes it might not be enough that you have a strong background in managing finances. Your financial connections could be a factor in why your application is refused. Joint credit accounts can link your credit account to your partner or friend’s own credit report, which can influence the car finance company’s decision about your application.

So being financially connected with someone who has an insignificant or poor credit history may put your application at a higher risk, and you will have a greater chance of being rejected. Financial connections remain on your credit report until that account is closed, and a remark of disassociation will be noted on your credit report.


A car finance application can be rejected for many reasons, from the smallest slip such as missing zeros in the salary report or mistakes in the application form. It is easier to take action if you know why you have been turned down, but if all of the possible reasons listed here don’t match your circumstances, it is best to ask the finance company directly. And of course, if you have been declined and you feel you should have been accepted then you can appeal their decision.

Finance companies will be more than willing to assist you in explaining what could be the possible cause of why your application was rejected. You can phone or write to the lender and ask for the status of your application, although expect it to take a little time. So, to be sure that you will not encounter this type of problem, double-check your application before submitting it, and be honest in terms of divulging the necessary details for your application for car finance