Auto loan refused, what to do?

30 Aug

You applied for a car loan from a bank or credit institution and it was refused. More boring still, the organism in question refuses to give you an explanation.

Faced with the failure of a negotiation, there are however several remedies to rebound and find a favorable outcome to your request.

Understand the reasons for refusal

The first thing to know is that the lender is not obliged to provide you with the reason for refusing your car loan. Credit does not escape the principle of freedom of contract and your bank is quite free to choose with whom it agrees to sign or not a loan agreement.

Do not be too insistent if your advisor refuses to communicate the reasons for your application being returned. There is only one case where the lending organization is obliged to specify the refusal of a credit application, it is when the customer is itself banked Bank of France (otherwise called FICP file) . Apart from this specific case, try for yourself to identify the negatives of your file, objectively.

The different grounds for refusal

The FICP file.

Centralized by the Banque de France and accessible to all lenders, this file lists the information of bad payers and all banking incidents of a customer over a period of five years.

Overdraft authorization exceeded, non-payment of a monthly credit, as many banking incidents that can block the obtaining of a car loan. If you are registered FICP, do not hesitate to go to a branch of the Bank of France to know the organization that has you.

Filing may be requested and accepted under certain specific conditions (change of situation, proven litigation with the bank). Beware, the FICP file prohibits any lender to issue a favorable response to a credit application: if you are registered, do not try to try your luck in another agency, the response to your credit application will be systematically negative.

An unbalanced budget.

Other cause of a car loan refusal, your financial situation is considered insufficient. When setting up an auto credit agreement, the lender analyzes the client’s debt ratio, ie the ratio between the fixed monthly expenses and the borrower’s salary.

If the fixed expenses exceed the salary by 30%, there is a good chance that your credit report will be rejected. On the other hand, each organization has its own conditions of granting a credit; do not hesitate to try your luck in another organization in case of refusal.

A risk profile.

When analyzing your credit application file, the bank or lender evaluates the client’s profile as a score. It can be different criteria, such as age, profession, type of contract, level of education, personal situation …

In other words, you are more likely to have a favorable answer if you have been on a permanent contract for fifteen years in the same newly hired company. Here again, the scoring practiced by the lenders does not obey any fixed rules. In case of refusal of your credit application, play the competition and try your luck elsewhere.

What to do in case of refusal?

Except for the case of FICP file, each bank has its own criteria for validating a credit file. If you think your application deserves further consideration, ask for a new evaluation highlighting the positive arguments in your case.

For example, a profit-sharing bonus and a substantial participation at the end of the year, a thirteenth month or if you switch to a permanent contract in the near future can be as many interesting elements to tip the scales on your side.

If possible, you can also increase your personal contribution with a live-in caregiver, or open a savings account to show your ability to save money.

If your file is still refused, try your luck in another organization. Scoring and criteria for awarding a credit vary from one organization to another. On the other hand, avoid organizations that accept credit conditions in a short time: their rates are often well above average and will put you in a debt situation that is difficult to manage.

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