I am 22, I have had a couple of car loans that were both supposed to be 5 year loans. The first loan I started in November of 2015. I ended up paying off the loan in 9 months. After I paid it off, I had ended up looking for a different car and started a new loan. I am just a little over a year into the loan and have almost paid this loan off as well.

I have noticed that I have difficulty getting financial institutions to lend money to me even though I have perfect credit (Never missed a payment since age 18). Are financial institutions less likely to lend me money because of my age or because they know I avoid interest by paying things off aggressively?

Note: Every loan I have held has only been in my name.

  • Are your only lines of credit car loans?
    – Hart CO
    Oct 20, 2017 at 19:20
  • I have a credit card and a very small mortgage.
    – Aszula
    Oct 20, 2017 at 19:23
  • Have these institutions said why they won't lend you money? What are you borrowing money for if you already have a car payment?
    – D Stanley
    Oct 20, 2017 at 20:31
  • I borrowed a very small sum of money for a mortgage, about 12,000. They did not say why they were declining my request.
    – Aszula
    Oct 20, 2017 at 20:33
  • 1
    How much do you owe now? How much is the house worth? Do you know what your credit score is? There are many factors that go into a loan approval.
    – D Stanley
    Oct 20, 2017 at 21:13

3 Answers 3


Are financial institutions less likely to lend me money because of my age

Yes. But they are especially unlikely to loan you money because you have little income.

or because they know I avoid interest by paying things off aggressively?

This won't affect them. But you might ask yourself how much credit history you have. Credit history can include all of loans, credit cards, rent, utilities, etc. You mention three loans. But you don't mention rent or utilities. You may simply not have much credit history, even if what you do have is good.

But again, the biggest thing that they will look at is your income history. If you have a small income, then it doesn't matter what your payment history is. They don't want to loan money to people who need money. They want to loan money to people who don't need to borrow but are instead bringing a future purchase into the present.

The ideal recipient is someone who has a high income and spends it all every month. Such a person is likely to borrow heavily but be able to keep up the payments.

Obsessing about your ability to borrow is probably the wrong approach. Instead focus on how you can meet your goals without borrowing. Eventually your ability to pay will catch up. Then they'll offer you money. Of course, you might not need it then.

Note that when I say little income, I'm talking about their perspective. You may be fully on track and making decent money or even very good money for your age. But they're looking for people who are mature in their careers and regularly bringing home large sums but who spend it faster than they can get it.

  • 1
    Although I agree with most of your answer, some of it has a bit of a "only the rich get loans" slant, which is not true. There are lenders that will lend to bad credit/low income people, but with higher interest rates and only with high loan-to-value ratios. they only care that they get their money back - whether through payments or foreclosure/repossession.
    – D Stanley
    Oct 20, 2017 at 20:17
  • It's not just getting their money back, it's making enough profit in the transaction that they're willing to lend you the money rather than waiting and lending it to someone else. And unfortunately, those below median wealth don't tend to be offered affordable loans. Yes, it becomes a self-fulfilling prophecy.
    – keshlam
    Nov 10, 2023 at 3:18

'Perfect' credit would be defined by your credit score. You may have a perfect repayment history, but that is only one factor in your credit score. Paying off a loan early doesn't by itself cause your score to go down. A lack of history, however, will result in a lower score. Lenders use the score because the general consensus is that what you have done in the past is the best indicator of what you will do in the future. In essence, your credit score tells a potential creditor what type of risk they are taking by lending you money. If you have very little history, the risk is not necessarily higher, but it is less predictable, so you have a lower score.

These pages explain what makes up your credit score:




  • A big factor was that when I was getting the original car loans, banks were unwilling to give me the loan, but I ended up getting many 'inquiries' on my credit report.
    – Aszula
    Oct 20, 2017 at 21:36
  • 1
    Each time you apply, that lender will request your credit score. When a lot of requests are being made, the assumption is that you are applying for a lot of credit and that can affect your score. While it is good to shop around, it's probably better to apply sparingly. Ask the necessary questions up front and apply with one institution. I got good terms on my first loan with my credit union. I didn't have any borrowing history, but I had maintained a savings balance there for several years prior, which helped in that case.
    – DSway
    Oct 20, 2017 at 21:56
  • The above comment is not correct. As long as you apply to several loans of the same type within a span of a few months, the effects on your credit score do not stack up. Nov 10, 2023 at 3:44

I paid off my car loan 6 months early. My credit rating dropped 50 points (from 799 to 749).

The stated reason was because they couldn't find any installment loans on my credit record. Which is true, the car loan was my last loan.

I then took out a account backed loan from a local credit union ($1000 with a interest cost of $39). Last time I looked, my credit rating was about 795 (because I now have an installment loan).

Note that perfect credit (never missing a payment) doesn't mean a maximum credit score. To get a high credit score, you need a good history of payments and 4 other items. See the links posted by @DSway for the details.

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