Can I Buy a Car After Being Denied an Auto Loan?

How to get approved on your car loan

For many people, a car is an essential part of daily life, providing reliable transportation to work, school, and other important activities. However, if you’ve been denied a car loan, you may be wondering if you’ll ever be able to afford buy a car. The good news is that there are options available, even if you’ve been denied an auto loan. Here are some tips to help you buy a car after being denied an auto loan:

Review your credit report

Reviewing your credit report is an important step to take if you’ve been denied an auto loan. Your credit report contains information about your credit history, including your payment history, outstanding debts, and any accounts that have been sent to collections. It’s important to review your credit report for errors or inaccuracies because they can negatively impact your credit score and make it harder to get approved for a loan.

When reviewing your credit report, you should check for the following:

  1. Accuracy of personal information: Check that your name, address, Social Security number, and other personal information is correct.
  2. Credit accounts: Make sure that all of your credit accounts are accurate and up-to-date. Check that your payment history is correct, and that the balances and credit limits are accurate.
  3. Negative items: Look for any negative items, such as late payments, collections, or charge-offs. These items can stay on your credit report for up to seven years and can have a significant impact on your credit score.
  4. Inquiries: Check for any inquiries on your credit report. Too many inquiries can hurt your credit score and make it harder to get approved for a loan.

If you find errors or inaccuracies on your credit report, you can dispute them with the credit bureau that provided the report. They are required by law to investigate your dispute and make any necessary corrections. Once the corrections have been made, your credit score may improve, which can help you get approved for a loan.

Improve your credit score

Improving your credit score is a crucial step to take if you’ve been denied a car loan. A good credit score can help you get approved for a loan and may even result in a lower interest rate. Here are some tips on how to improve your credit score:

  1. Pay your bills on time: Payment history is the most important factor in determining your credit score. Late payments can have a significant negative impact on your score, so make sure you pay your bills on time.
  2. Pay down your debts: The amount of debt you have compared to your credit limit, also known as your credit utilization ratio, is another important factor in your credit score. Try to keep your credit utilization ratio below 30% and pay down your debts as much as possible.
  3. Don’t close old accounts: The length of your credit history is also a factor in your credit score. Closing old accounts can shorten your credit history and potentially lower your score. Instead, keep old accounts open and use them occasionally to keep them active.
  4. Limit credit inquiries: Applying for too many loans or credit cards can result in multiple inquiries on your credit report, which can lower your score. Limit your credit inquiries and only apply for credit when you really need it.
  5. Dispute errors on your credit report: As mentioned before, errors or inaccuracies on your credit report can hurt your credit score. Dispute any errors or inaccuracies with the credit bureau that provided the report.
  6. Use credit responsibly: Finally, use credit responsibly and don’t take on more debt than you can handle. Make sure to only borrow what you can afford to pay back and avoid maxing out your credit cards.

Consider a co-signer

Considering a co-signer is a possible option to take if you’ve been denied an auto loan due to poor credit history. A co-signer is someone who agrees to take responsibility for the loan if the primary borrower fails to make payments.

Having a co-signer with good credit can increase your chances of getting approved for a loan and may result in a lower interest rate.

When considering a co-signer, here are some important factors to keep in mind:

  1. Choose someone with good credit: Your co-signer should have good credit history and a solid credit score. Lenders will look at their creditworthiness when deciding whether to approve the loan.
  2. Choose someone you trust: The co-signer will be responsible for the loan if you are unable to make payments. Make sure to choose someone you trust and have a good relationship with.
  3. Understand the risks: A co-signer is taking on a significant risk by agreeing to be responsible for the loan. If you are unable to make payments, it could negatively impact their credit score and financial situation.
  4. Communicate clearly: Make sure to communicate clearly with your co-signer about the terms of the loan and their responsibilities. Discuss payment plans and make sure they understand the risks involved.
  5. Keep your payments up to date: Even with a co-signer, it’s important to make your loan payments on time. Late payments can negatively impact both your credit score and the co-signer’s credit score.

Overall, having a co-signer can be a helpful option if you’ve been denied an auto loan due to poor credit history.

Look for alternative lenders

If you’ve been denied a car loan, looking for alternative lenders is another option to consider. Alternative lenders are financial institutions that offer loans to people who may not qualify for traditional loans from banks or credit unions. Here are some tips on how to find alternative lenders:

  1. Research online: There are many alternative lenders that operate online. You can search for lenders using keywords like “bad credit auto loans” or “alternative auto loans”. Make sure to read reviews and compare rates before applying.
  2. Check with credit unions: Credit unions are non-profit financial institutions that often offer more flexible loan terms than banks. They may be willing to work with borrowers who have less-than-perfect credit history.
  3. Consider peer-to-peer lending: Peer-to-peer lending is a platform that connects borrowers with investors who are willing to lend money. This can be a good option for borrowers who don’t qualify for traditional loans.
  4. Look for buy-here-pay-here dealerships: Buy-here-pay-here dealerships are car dealerships that offer financing to people with poor credit history.
  5. Ask for recommendations: Ask friends or family members if they have any recommendations for alternative lenders. They may know of lenders who have helped them in the past.

When looking for alternative lenders, it’s important to keep in mind that they may charge higher interest rates and fees than traditional lenders.

Save up for a down payment

 If you can’t get approved for a loan, you may need to save up for a down payment on a car. This can help you qualify for a loan and may also help you get a better interest rate. Saving for a down payment is an important step to take when preparing to purchase a car.

A down payment is a lump sum of money paid upfront that reduces the amount you need to borrow and can also lower your interest rate. Here are some tips on how to save for a down payment:

  1. Determine how much you need to save: The down payment amount typically ranges from 10-20% of the car’s purchase price. Determine how much you need to save based on the car you want to purchase and your budget.
  2. Create a budget: Review your monthly expenses and income to create a budget. Look for areas where you can reduce expenses to save more money. Consider a side hustle or selling items you no longer need to earn extra cash.
  3. Open a dedicated savings account: Open a savings account specifically for your down payment. This can help you track your progress and resist the temptation to spend the money on other things.
  4. Set a savings goal and timeline: Set a realistic savings goal and timeline based on your budget and income. Use a savings calculator to determine how much you need to save each month to reach your goal.
  5. Automate your savings: Set up automatic transfers from your checking account to your savings account each month. This can help you save consistently and avoid the temptation to spend the money.
  6. Consider a windfall: If you receive a bonus or tax refund, consider putting it towards your down payment. This can help you reach your goal faster.
  7. Be patient: Saving for a down payment can take time, but it’s worth it in the long run. Be patient and stay motivated by tracking your progress and celebrating small milestones along the way.

Saving for a down payment is an important step to take when preparing to purchase a car. By creating a budget, setting a savings goal and timeline, and automating your savings, you can save consistently and reach your goal faster.

Consider a used car

Buying a used car can be a smart financial decision, as it can save you money on the purchase price and potentially on insurance and registration costs. Here are some tips on how to buy a used car:

  1. Determine your budget: Determine how much you can afford to spend on a used car. Consider the purchase price, insurance costs, registration fees, and maintenance expenses.
  2. Research the car: Research the make and model of the car you’re interested in. Look for reviews, reliability ratings, and common issues to be aware of. This can help you avoid buying a car that will require costly repairs down the line.
  3. Check the car’s history: Check the car’s history using a service like Carfax or AutoCheck. This can help you identify any accidents or major repairs the car has undergone.
  4. Have the car inspected: Have the car inspected by a trusted mechanic before purchasing. This can help you identify any hidden issues or potential maintenance needs.
  5. Test drive the car: Test drive the car to get a feel for how it handles and to check for any unusual noises or issues.
  6. Negotiate the price: Negotiate the price with the seller based on the car’s condition, history, and any maintenance needs identified during the inspection.
  7. Get financing if needed: If you need financing, compare rates from different lenders to find the best deal. Consider getting pre-approved for a loan to simplify the buying process.
  8. Complete the paperwork: Complete the necessary paperwork, including the title transfer, registration, and insurance.
  9. Maintain the car: Once you’ve purchased the car, maintain it regularly to keep it running smoothly and to avoid costly repairs down the line.

Buying a used car can be a smart financial decision if you do your research, have the car inspected, negotiate the price, and maintain the car properly. By following these tips, you can find a reliable used car that fits your budget and meets your needs.


In conclusion, being denied an auto loan doesn’t mean you can’t buy a car. There are many options available, including improving your credit score, finding a co-signer, looking for alternative lenders, saving up for a down payment, and considering a used car.

Credit problems can make getting approved for an auto loan more difficult, but Westland Auto Sales is here to help! With relationships with multiple lenders, we can get you financed. Good credit, bad credit, first time buyer? Our lenders work with all types of scores and situations. If you are struggling to get approved because of your credit, it’s time to give us a try! Get started by filling out our car loan application today.