A refusal of car loan is common, several causes can cause a refusal as including the debt ratio, the rest to live or the professional situation of the borrower. Here are several ways to deal with a refusal and get funding.
Refusal of auto loan: explanations
Whether for the purchase of a car or the subscription of a leasing, it is necessary to go through the financing box. This is a consumer loan that can be used for the purchase of the vehicle, strongly recommended in the context of a car dealership purchase or simply a personal loan, the amount of which is freely determined by the motorist. In both cases, it is necessary to submit a financing application specifying the price of the vehicle.
This request will make it possible to study the situation of the borrower, namely his personal, professional and financial situation. On the personal part, it is simply the terms of subscription with verification of identity. On the other hand, the professional and financial situation can lead to a refusal of funding, whether it is linked to the employment contract that does not have sufficient guarantees, for example a fixed-term contract, or that it is the situation of the bank accounts that leads to a refusal.
Reasons for a car loan refusal
There are basically three reasons that come up regularly about a car loan refusal: the employment contract, the debt ratio and the rest to live.
The work contract
In order to be able to borrow from the banks, it is necessary to provide guarantees on the repayment of monthly payments and credit in its entirety, so the employment contract is essential for the bank to check whether the borrower is able to meet all its deadlines. If the contract of employment is in fixed-term contract and of a duration less than the duration of the credit, then the bank will not engage in the financing. You have to opt for a co-borrower or take out a credit for a shorter period.
The debt ratio
In France, the financial authorities have set the debt ratio at 33%, ie above this threshold, the consumer’s financial situation is deteriorating, so it is not possible to Borrow beyond 33% and when a new credit approach or exceed this limit, a combination of loans is required to reduce monthly payments and allow new funding. The increase in income makes it possible in particular to reduce the debt ratio, a change in employment situation may allow the consumer to get out of this situation of refusal of car loan.
The rest to live
The rest to live is the result of the wages to which we will remove all household expenses, recurrent expenses: electricity, credits, taxes, heating, phone packages … When all these charges and levies are withdrawn from the salary, we call the remaining sum the rest to live, that is to say to eat and leisure. If this sum is insufficient, it is possible that the bank refuses the loan, so we must play on the various charges to lighten them.