Can I appeal a car finance decision?

Rejection hurts. No matter whether it’s a job, romantic partner, or car finance application, that ‘thanks, but no thanks’ message always stings.
 
But what really matters is how you bounce back from that rejection. And unlike the rejection itself, what happens next is completely under your control.
 
While you can appeal a car finance decision, your time might be better spent figuring out why you’ve been rejected.
 
When you know where you went wrong, you can take steps to improve your eligibility and increase your chances of getting the green light next time.

Is it possible to appeal a car finance decision?

You’ve submitted your application, waited patiently for the result (usually less than two minutes, but still), and it’s not the news you wanted – you’ve been rejected.
 
What happens next?
 
If you think the lender has made the wrong decision, you might be able to appeal. It all depends on the lender’s policies - there might be restrictions on when and why you can lodge an appeal, for example.
 
But it’s also always worth asking yourself if an appeal is the right move.
 
Depending on your situation, you might be better off making some changes and reapplying for finance rather than going through the appeals process. 

What are the most common reasons for car finance rejections?

While every application is considered individually, there are a few common reasons why the computer might say no to you:

A low credit score

Your credit score might be in need of a little TLC if you’ve ever made late payments, missed a payment altogether, had a County Court Judgement (CCJ) issued against you, or been in a debt management plan like an Individual Voluntary Arrangement (IVA).

Limited affordability

Affordability checks are becoming increasingly important in the car finance process. These look at how much you want to borrow compared to your income and how much you can afford to put towards a monthly repayment. If paying for your dream wheels would break the bank – and potentially leave you struggling with the essentials - a responsible lender won’t agree to issue your loan.

Not meeting eligibility requirements

Every lender has its own eligibility requirements. You might be rejected if you don’t meet their terms and conditions because of your age, type of driving licence, or more.

Mistakes on your application

We’ve all been guilty of typing too quickly and accidentally getting a character wrong in our postcodes or missing a digit on your take home pay. These simple mistakes can lead to an undeserved rejection but, happily, they’re an easy fix. 

Your employment status

If you work a 9 to 5 (what a way to make a living - we love you Dolly), you’ll usually meet most lender’s eligibility requirements but if you have a more unusual working life and you could find yourself rejected. Some lenders won’t give loans to self-employed workers, pensioners, or people claiming benefits, for example.

What are the steps to take after a car finance rejection?

Sometimes the thing to do is nothing at all – at least not straight away. Take some time, pop the kettle on (or a drop of something stronger, we won’t judge), and make a plan of action.
 
First things first, try to find out why you were rejected. If you’ve received any letters or emails from the lender, these might give you a reason. Alternatively, you could give them a call to try and learn more.
 
If you can’t get in contact with the lender directly, look at your credit report. You might find that your score has dipped recently or there might be a mistake listed that’s making your payment history look worse than it should.
 
Finally, read over their eligibility requirements. Maybe there’s an age limit or income threshold that you missed while skim reading the first time round.

How can you appeal a car finance decision?

When you feel like an appeal is the best way forward, you can ask the lender for a reconsideration.
 
Depending on the lender, they might outline a formal appeal process on their website. If not, you can’t go wrong by writing a clear and concise email or letter explaining exactly why you think your rejection is a mistake and why they should reconsider.
 
In most cases, the lender will ask you to supply additional documents to support your case. This could include things like proof of income if your application was rejected due to your affordability, proof of address if you mistyped your street name, or proof of identity if you got your date of birth wrong.
 
If you’ve found a mistake on your credit report, you can raise this with the relevant credit reference agency and work to get it corrected.

How can you improve your chances of approval on reapplication?

While there’s no way to guarantee a car finance approval, there are a few different ways that you can weigh the odds in your favour:

Improve your credit score

One of the best things about your credit score is that it’s never fixed. No matter what it looks like right now, you can take steps to improve it over time. Positive actions that could gain you a few points include registering on the electoral roll, making all your payments on time, keeping your overall credit utilisation low, and regularly checking your credit report for mistakes.

Choose a cheaper car

The larger the loan, the higher the risk for the lender. If you’re struggling to get an approval due to your affordability or credit score, choosing a cheaper, second-hand car or a model that’s missing the more premium features could reduce the amount you need to borrow and improve your eligibility.

Save a bigger deposit

The same principle applies when it comes to your deposit. The more you can put down, the less you’ll need to borrow. If you can afford to wait a little while to buy your new wheels and save a bigger deposit or dip into your holiday fund every little helps (just ask Tesco).

What alternative options are available if your car finance is denied?

Finding yourself stuck in a financial dead end? Don’t worry; alternative routes are available. If making an appeal or reapplying isn’t an option for you, consider:

Applying with a specialist lender

The world of car finance is bigger than you might think. There are lots of different lenders out there and many help people who wouldn’t get approved elsewhere. That might include specialist bad credit car finance lenders, disability car finance providers, and more.

Joint or guarantor loans

Sometimes it’s best not to go it alone. With a joint loan, you’ll be sharing responsibility for the finance with someone else. This could help boost your affordability as it won’t just be your income that’s considered.
 
If your credit score is the issue, then a guarantor loan might be a good option. This type of finance means you’ll appoint someone as a guarantor – usually someone with a good credit score – who will agree to step in and pay your loan payments if you can’t.

Personal loans

A personal loan works differently to types of car finance like Hire Purchase (HP) and Personal Contract Purchase (PCP) as it’s not secured against the car. Instead, you’ll be its legal owner as soon as you use the loan to pay the dealer. You might also be able to get a personal loan from your bank even if you have a less than perfect credit score if you’ve been a loyal, long-term customer.

Leasing

If car ownership isn’t all that important to you, you might want to consider a lease. Also known as Personal Contract Hire (PCH), this finance type is a lot like a long-term car rental. You’ll pay a fixed amount each month and then when the lease ends, you’ll simply hand the car back.