What typically happens if a dealer processes your credit application and it gets denied?

When a dealer processes your credit application and it gets denied, it often leads to a scenario where you may still have options for financing, but they come with different terms. In this case, the dealer might seek out alternative lenders who are willing to give you a loan despite the initial denial. However, those lenders may require you to accept higher interest rates since they perceive a greater risk associated with lending to someone whose credit was flagged in the first place. Higher interest rates serve as a compensation for that risk, which means that while you may still be able to purchase the car, the cost of borrowing will be higher than it might have been with an approved credit application. This is a critical understanding for anyone navigating the car-buying process, as it directly impacts the overall financial implications of your purchase.