5 Reasons Why Your Car Loan Gets Rejected

Moneymax Editorial Team

Moneymax Editorial Team

Last updated November 23, 2015

Denied Car Loan Registration

Much of the money that makes up funds borrowed from banks by the general public belongs to car loans, or auto loans. These days, it is much easier for someone who wants to finance the purchase of a new car to go through a loan to get it.

While the odds that you get a rejection for a car loan are low, it can still happen. It’s a natural thing for creditors to look at all available information before they allow someone to borrow money. What they find will factor into whether or not you’re granted a loan.

Here’s a look at a few reasons why your car loan gets rejected.

Incorrect/Unclear Information

The information you provide to the bank or lending company is extremely important. All of it will be used by lenders to investigate whether or not you are capable of paying back the amount you borrow. For example, the address and phone number you provide will be checked for validity. Even the tiniest mistake may be a cause for your loan to be rejected.

How to prevent it: Give your forms the once over, even if you’re 100% sure that everything you’ve placed is correct. Remember to check your zip code, as this can vary by the district in a single city.

Lack of Stable Income

Top priority on a lender’s investigation is figuring out whether or not you can handle paying back the amount you borrow in a timely manner. To that end, lack of a stable job – or a record of jumping from one job to another in the span of a year can heavily damage your chances of securing any loan.

How to prevent it: Six months at a job doesn’t mean you should be thinking about incurring a new expense. Consider doubling down on debt payment and stabilizing your income flow before you think about that new car smell.

Poor Debt Record

Debt is another large consideration when a lender looks into a potential borrower. Poor management of current debt: like credit cards that are over the limit or defaulted loans, can hurt your chances of getting a loan application approved.

How to prevent it: It’s not as much about debt prevention as it is about debt management. Managing two loans can be tough on a budget, but doable. Lenders will look at constant payment as a plus, and will help your credit score look better should you apply for an auto loan.

Large Loan Request

If the answer to the question “how much do you want to borrow?” is “as much as possible,” you’ll want to hold off on visiting the nearest auto loan-friendly bank. There is a limit to how much you can borrow based on your income and the amount of the car you plan on purchasing. Most banks allow anywhere between Php 300,000 to around Php 1 Million for loans in general.

How to prevent it: Take your funds and your budget into consideration. Think about how much you can afford to pay every month in amortization dues, and in interest. Consider the car you want versus the car you need: cars may be built to last longer, but some models will last longer than others.

Read more: Car Loan Restructure in the Philippines: Why You Should Apply for One and How to Do It


There is a vast difference between providing information that is lacking, and outright falsifying data that you provide when applying for a loan. Apart from it being a straight shot to your application being denied, falsifying documents, your identity, or your credit history is a felony.

How to prevent it: A lie of omission is still a lie. You can’t trick banks or lenders into processing a loan with false information. Unless you’d like to face criminal charges, don’t even consider the tiniest lie in your application for a loan.

Final Thoughts

It’s borrowed money that you put towards owning a vehicle of your own. An auto loan has very obvious conditions attached to it, as anyone who’s taken one out can attest to. A great many banks that provide auto loans also have deals like free insurance coverage attached to it.

The prospect of buying your own car is very enticing. It is vital to remember that it’s a comparison of the car that you want against your funds, and your financial track record that will determine whether or not your application for a loan gets rejected or accepted.

The Moneymax Editorial Team consists of talented and experienced writers, editors, investors, and subject matter experts on a mission to help Filipinos build healthier financial lives. Browse the Moneymax blog for information and advice on credit cards, loans, insurance, investments, and other personal finance topics. For more financial news and articles, follow Moneymax on LinkedIn.


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