Getting a first car is a big thing for a lot of young Malaysians. For fresh graduates who need to commute to work every day, owning a car allows more freedom, flexibility, and convenience.
Many people assume that getting a car loan is simple, which only requires visiting a dealer, picking a car, signing some papers, and waiting for approval. But the truth is that many people are shocked when their applications are turned down.
Don’t worry if your application has ever been rejected because you’re not the only one! Below are the most common reasons why car loan applications get rejected in Malaysia and what you can do to increase your chances of approval.
- No or Very Limited Credit History
As a fresh graduate, you may not have a credit score as you do not have any loans under your name. So on the CTOS scale, your credit score falls under “No score”.
Because of this, banks are unable to determine your financial status and decide whether you can afford the loan. Therefore, banks are more hesitant to lend to you, as they are uncertain about your ability to repay the loan.
👉Solution:
Consider applying for a low-limit credit card or a small personal loan first, and maintain a good repayment record for a few months before applying for a car loan.
- Unstable Employment Status
Most fresh graduates begin their careers with a short-term or contract job, or a probationary period lasting between 3 and 6 months.
Banks prefer applicants with stable income and confirmed employment status. If you’re still under probation, your car loan application may be rejected or delayed until your job is confirmed.
👉 Solution:
Apply after receiving your confirmation letter or provide strong supporting documents such as your employment offer letter, EPF contribution records, and salary slips.
- High Monthly Commitment
Fresh graduate salaries in Malaysia typically range between RM2,500 and RM4,000, depending on industry and location.
When banks calculate your Debt Service Ratio (DSR), they look at how much of your monthly income goes toward debt payments. If the car loan payment consumes too much of your money, or if you already have PTPTN or credit card debt, the bank may reject your application.
👉Solution:
Choose a more affordable car or pay a larger down payment (e.g., 10%-20%) to reduce the loan amount and monthly instalment.
- Insufficient Supporting Documents
Many young applicants underestimate the importance of documentation. Missing or incomplete documents can cause delays or immediate rejection.
Common issues include:
- Not submitting at least 3 months’ salary slips
- Lack of EPF contribution proof (KWSP)
- No bank statements or employment verification
👉Solution:
Prepare the following before applying:
- IC (MyKad)
- Offer letter or confirmation letter from employer
- 3 months’ salary slips
- EPF statement / bank statements
- Driving license (if required by the bank)
- Guarantor Requirement Not Met
Some banks may require a guarantor if your income is below their minimum salary requirement or if you have no credit history.
However, if your guarantor does not meet the bank’s criteria, such as minimum income level, good credit score, or stable employment then your application may still be rejected.
👉 Solution:
Choose a guarantor with stable income, good credit history, and a strong financial background to increase the approval rate.
- Choosing a Car That Exceeds Your Budget
A lot of fresh graduates want to buy new or high-end cars, but banks will check to see if your income can cover the monthly payments.
If the price of the car is too high compared to your income, your loan will probably not be approved.
👉 Solution:
Start with a lower-priced car or a reliable used car to build your credit record first. You can always upgrade later once your income grows.
How Fresh Graduates Can Improve Car Loan Approval Chances
✅ Apply for a car loan after you have a job offer.
✅ Complete all the paperwork ahead of time.
✅ Keep your DSR below 60% every month.
✅ Choose a guarantor with strong financial standing
✅ Start with a car within your budget
It’s usual for fresh graduates in Malaysia to be turned down for car loans, but it’s not permanent. You may greatly increase your chances of getting approved by improving your credit history, giving the right paperwork, and showing that you are financially stable.
Being patient and strategic now can help you get the keys to your first car faster and at better loan terms.