Why a Declined Car Loan Does Not Always Mean a Lost Sale
By Derek Langhorn | National Dealer Development Manager | Rossi Financial
A declined financing application does not always mean the customer cannot buy a vehicle. Sometimes the deal needs a different approach.
Having worked in automotive sales and now helping dealerships structure financing applications, I know how frustrating it can be when a customer finds the right vehicle but the financing is declined.
Before giving up on the sale, I encourage dealers to understand why the application was declined and whether another financing structure might work.
Understand Why the Application Was Declined
Traditional lenders may decline an application because of credit history, income, existing debt, vehicle age or other lending requirements.
A decline from one lender does not automatically mean another lender will reach the same decision. Different lenders use different programs and approval guidelines.
Consider a Different Vehicle
Sometimes the issue is not the customer. It is the vehicle or the amount being financed.
For example, a customer may not qualify for financing on a $25,000 SUV but could be considered for a suitable $15,000 SUV with a lower loan amount.
Helping the customer choose a vehicle that better fits their financial situation may create another opportunity to complete the sale.
Review the Down Payment
A larger down payment reduces the amount being financed and can improve the equity position of the deal.
At Rossi Financial, we are an equity lender. The vehicle’s value, customer’s credit and total amount financed are important parts of our review.
A suitable down payment may help make a deal possible, but it does not guarantee approval. The customer’s ability to afford the payments remains important.
Look at the Customer’s Income
Not every customer earns income in the same way. Some are self-employed, work more than one job or receive other regular sources of income.
Rossi Financial can review different income situations, subject to our verification requirements and lending guidelines.
Before assuming a customer cannot qualify, make sure their income information is complete and accurate.
A Simple Example of Restructuring a Deal
Imagine a customer has been declined for financing on a $20,000 vehicle with a $2,000 down payment.
Original Deal
Vehicle price: $20,000
Down payment: $2,000
Amount before taxes and fees: $18,000
Alternative Deal
Vehicle price: $15,000
Down payment: $4,000
Amount before taxes and fees: $11,000
The alternative reduces the amount to be financed by $7,000.
This does not mean the second deal will automatically be approved. It shows how changing the vehicle and down payment can create a different financing opportunity.
Talk to Your Lender Before Losing the Sale
One of the benefits of working with Rossi Financial is having someone you can speak with about the structure of a deal before submitting the application.
When contacting me about a deal, please have the vehicle listing link, CARFAX link, expected payment range and available down payment ready. This helps us review the situation and discuss possible options.
My advice to dealers: Before you tell a customer the deal cannot be done, make sure you have explored the financing options that may be available.
Let’s Work on Your Next Deal
As National Dealer Development Manager at Rossi Financial, I am here to help dealerships understand our financing programs, review possible deal structures and identify opportunities that may not fit traditional lending programs.
Sometimes a short conversation before submitting a deal can save time for your dealership and your customer.
Derek Langhorn
National Dealer Development Manager
Rossi Financial Inc.
derek@rossifinancial.ca
226-387-7227
This article is for dealer education. All financing applications are subject to Rossi Financial’s lending guidelines, income verification and underwriting approval. Examples are illustrative and exclude taxes, fees and financing costs.
