A car dealership's financing department uses many different lenders to approve its credit applications. Your credit report, credit score and income, as well as the amount of the loan all factor into determining your creditworthiness. Many dealerships are so confident they can get you approved, they give you the keys to the car ahead of time – you agree to sign the loan paperwork when it's ready. If the dealer cannot find financing, you have some other options.
TL;DR (Too Long; Didn't Read)
If you've taken a car home but your dealership didn't find any financing, you can return the car, shop around for financing, find a co-signer or adjust your loan amount.
Shop Around for Financing
You don't need to limit yourself to dealer-arranged financing. Contact your bank, local credit unions and online banks to find a lender who will approve your loan application. Each lender does pull your credit report, but the credit bureau treats multiple applications for car loans within a 30-day period as one inquiry. This rule lets you shop around for auto loans without fear of dinging your credit score.
There are many subprime lenders who deal specifically with individuals with poor or limited credit history. You may suffer a higher interest rate, but you'll still have the car.
Get a Co-signer
When you cannot get traditional financing due to credit history, you may be approved with a co-signer. Ask someone you know and trust to attach their name and credit history to your auto application. Their income and credit history may seal the deal with the auto lenders, allowing you to keep possession of the vehicle.
Change the Loan Amount
Some lenders deny applications because your income does not support the monthly car payment. By providing a higher down payment, negotiating the price of the vehicle or choosing a cheaper vehicle, you may be approved for an auto loan. Change the terms of your credit application to reflect the price change and resubmit your application to lenders.
Return the Car
When all avenues fail, return the car to the dealership. You are not responsible for buying the car if you didn't sign the bill of sale. Explain to the dealer you cannot purchase the car due to a lack of financing.
Deals break down all the time in the auto sales industry. The dealer accepts the car and sells it to the next interested person.
Watch for a Decline Letter
Make sure you watch your postal mail for the decline letter. This letter outlines the reasons your application was declined. You can get a free credit report from the bureau the lender used to deny your application. Pull your credit report and look for any ways in which you could improve your score.
Leigh Thompson began writing in 2007 and specializes in creating content for websites. She has been published online in various capacities. Thompson has an associate degree in information technology from the University of Kansas and is working on a bachelor's degree in business and personal finance.