Auto loan rejections are at an all-time high — here's how to improve your odds of getting approved – CNBC

If you’ve been turned down for a car loan recently, you’re not alone: Rejection rates for auto loan applications reached a record high in 2023, according to the Federal Reserve Bank of New York’s Consumer Expectations Credit Access Survey, jumping from 5.2% in 2022 to 11%.

Prices for new and used cars are still elevated and higher interest rates mean car payments have increased, too. The average monthly payment for a new car, according to Experian, was $726 in the third quarter of 2023, up from $701 in 2022 and $617 in 2021.

The good news is, if you need a car loan, there are things you can do to increase the chances you’ll get approved.

Choose the right auto loan and lender  

If you need a car loan but have bad credit, there are lenders that will work with borrowers with scores below 670. One of CNBC Select’s top picks in this category is Capital One Auto Finance, which allows borrowers to take advantage of rates from a large national bank [does that mean the rates will be lower? why do you want rates from a large bank?]. It also offers prequalification without a credit check and has convenient tools to search and compare new and used cars for sale.

MyAutoloan is a marketplace that allows car shoppers to compare loan terms and rates, with options for those with lower credit scores. In addition to loans for new and used vehicles, the site also offers refinancing options and lease buyout loans.

Work on your credit score 

Your credit score is a big factor in getting any type of credit and there are several ways you can improve it, including paying your bills on time and in full if you don’t already. [why are we suggesting this one? is it because bill pay has a big or fast impact? or is it just b/c it’s the easiest one to fix?]. To help, automate your credit card and other payments, or set calendar reminders on your phone so nothing slips through the cracks.  

If you pay your rent, utilities and subscription services on time, there are also services that can help boost your score by reporting these kind of payments, which are not normally included on a credit report. Experian Boost™, for example, connects to your bank account and is available for free.  

It’s also worth it to check for and correct any errors on your credit report, so you’re not dinged for something erroneous. If you discover incorrect information or an account that doesn’t belong to you, file a dispute on your credit report. Getting it fixed[?] can raise your credit score. [i don’t think just filing a dispute raises your score]

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