Getting A Car Loan and Wondering Whatever Happened To ... ? (2024)

FAQs

Can you change your mind after being approved for a car loan? ›

The first step would be to review your loan agreement carefully to see if there are any provisions related to cancellation or changes to the loan. If there is a cooling-off period, you may be able to cancel the loan without penalty within a certain timeframe, typically ranging from a few days to a couple of weeks.

If you're approved for a bad credit car loan and decide that you don't want to use it, you can walk away with no strings attached. You can simply tell the lender that you don't want to use the loan – as long as you haven't signed the loan agreement or buyer's order, or taken delivery of a vehicle.

Turning to your lender is always the first step if you're having trouble with car payments. You can also get out of your car loan by refinancing to better terms, selling your car or turning it in to your lender through voluntary repossession.

If the car breaks down and can't be driven, you're still on the hook. The vast majority of car loans are just that: loans. The credit union makes the loan in good faith, and you are expected to pay back the money on schedule – regardless of the condition of the vehicle.

If you bought your vehicle, you could renegotiate or refinance your loan or sell the car. You may be able to transfer a lease to someone else or pony up a fee to exit it early.

Can You Apply for a Loan and Not Accept It? Yes. If a lender has approved your application for a personal loan, you're not required to take it. This is an important distinction from credit cards, where your account is opened immediately upon approval.

If the loan hasn't been approved yet and the loan agreement hasn't been signed, you may be able to cancel the loan. However, after the loan money has been dispersed, you can't cancel the loan.

While a denied auto loan doesn't affect your credit score, hard credit pulls could lower your score by five points, even if the associated loan isn't approved. To prevent penalty, make sure to complete all of your credit checks and compare loan options within what is typically a 14-day shopping window.

If you have a lot of debt gathered from other loans or credit cards, your DTI ratio — or debt-to-income ratio — will be higher. A DTI ratio of 50 percent or higher may lead to rejection. Paying down your debts is the best way to lower your DTI, but if you're able, a second source of income can also lower your DTI.

Lenders are not all equal, so the number of deferments you'll be allowed on a car loan will vary. Keep in mind that many lenders will only approve one deferment, where others may approve two or more.

What is a reasonable car payment? ›

Financial experts recommend spending no more than about 10% to 15% of your monthly take-home pay on an auto loan payment. These percentages do not factor in total car expenses, including gas, insurance, repairs and maintenance costs.

Is a repo worse than a surrender? Yes, a repossession is typically worse than a voluntary surrender because it shows that the borrower failed to meet their obligations and the lender had to take action to recover the vehicle. This can have a more negative impact on one's credit score and future borrowing opportunities.

Ask Your Lender to Skip or Defer a Car Payment

This means that you may not be required to make the monthly payment. Instead, the amount due will be delayed until the end of your loan. This could result in lower monthly payments when you're having trouble paying when bills are due.

Voluntary repossession can have a significant negative impact on your credit score. This record will stay on your credit report for seven years, potentially making it harder for you to get approved for new credit during this period.

Absolutely. If you've gone through the necessary steps to apply for an auto loan and been approved, you're not obligated to accept the offer. Auto experts advise borrowers to seek preapproval with multiple lenders to find the best offer, then use that as a backup at the dealership.

You should know that a federal credit law gives you three days to: Reconsider a signed credit agreement. Cancel the deal without penalty.

If you've already received the money for your loan, and you want to cancel your loan, you'll be expected to pay it back. The lender must give you 30 days to do so. It's important to note that any contract you have in place for an item you bought on credit won't be affected by cancelling your loan application.

If you change your mind, you'll have to apply for a new loan and restart the process.