TDSR and Car Loans

Many Canadian consumers fill out a car loan application already knowing the result. Some anticipate rejection or at least a little extra effort before the application is approved. Others predict instant approval. Consumers expecting rejection almost always have bad credit. In addition to self aware bad credit consumers there are also many consumers in Canada that are in ‘bad credit denial’.

A bad credit customer in denial will often change their tune after receiving the bad news and ultimately admit they have credit problems. That is a very common scenario. A not so common scenario is the rejected car application for a consumer with good credit.

There are occasions where someone with strong credit can walk into a car dealership, apply for a car loan and still be denied. Although it surprises both the consumer and the car dealer, it is actually quite common. This often shocking result is caused by a lack of affordability and sometimes referred to as the Debt Service Decline.

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