When applying for a car loan, we get so attentive on what we should and must do in order to get approved that often times we overlook some of the actions that end up working against us and mitigating our chances of getting into the vehicle we want.
It is known that while the advance of the internet has made it so much easier for the average consumer to access information and get educated when considering purchasing a car, truck or SUV, it has also helped spread a massive amount of invaluable news and tips that actually harm the chances of an easy approval.
Our highly skilled finance specialists here at Titanium Auto Credit put together some of the actions that might be the reason why you have been struggling to get a good deal on an auto loan.
1) Multiple Credit Checks Or Applications:
We constantly mention here on our blog how crucial it is to avoid applying to multiple places at the same time. The reason being is that banks will see you as higher risk; red flags are raised in the eyes of lending institutions when a prospect is deemed to be taking any chances they can get. They refer to this as “credit-seeking”. For this reason, pick a company that consists of highly skilled professionals that you can trust and that will work as hard as they can in your approval.
2) Go Over Budget:
It may seem obvious you should avoid going over budget when purchasing a new vehicle. However, by not performing a pre-approval process online chances are you will end up getting emotional at a dealership and biting off more than you can chew. Prioritizing logic over emotion when purchasing a vehicle may be a determining factor on whether you will or won’t get approved and honour your payments. Similarly, making sure the numbers work on the long term is also vital. Ask yourself: how likely it is that you will be able to afford these payments in a year from now? Avoid unpleasant surprises.
3) High Utilization Ratio:
Thirdly, a relevant tip is to never use more than 50% of your credit card limit because it hurts your score in the long term. The high utilization ratio is seen as a red flag by banks and may be a decisive factor working against your approval.
4) Miss Payments Or Even Paying Too Soon:
We are all aware it is quite obvious you shouldn’t miss any payments if you are looking for boosting your credit score and your relationship with financial institutions. However, what most people don’t know is that paying off your debt too quickly may not always be beneficial. It is strongly recommended that you make every payment religiously for at least a year. After all, 35% of your credit score is based on your history of paying loans, a sum of money that is borrowed to you to be paid overtime.
After all, that’s what credit is, repayment of money over time, take away the time and it doesn’t help your score. Stick to the plan and you will be thankful in the long term.
All in all, boosting your credit score and applying for a car loan shouldn’t be scary or stressful. Here at Titanium Auto Credit, we focus on developing content that will genuinely help assess your situation better and make the best decisions. Don’t hesitate to contact us with any questions, we will be happy to assist you.