Are you looking for bad credit car finance?
Finding bad credit car finance can be tricky. Besides that, buyers can have many reasons to fear rejection from a lender or broker. Whether it be bad credit in the past, a first-time credit application, being self-employed or a non-Australian resident there is no need to fret when it comes to being approved. There are ways around these things and bad credit car finance does exist. Here are our 5 top tips:
1. Clear your debts and show you can save
When approaching a broker or lender for a car loan or bad credit car finance, even if intended to borrow up to 100% of the car’s value, showing you are paying off existing debts or saving goes a long way to gaining approval. Despite the past, demonstrating a stable financial situation is vital. This shows lenders you have a disposable income to spend on car finance, plus all the other extras cars need like fuel, insurance, and maintenance.
2. Look for a car that doesn’t blow the budget
Being rejected by a lender is more likely if asking too much, especially when applying for bad credit car finance. Buying a car isn’t just a matter of handing over an amount equal to the ticket price, there are other things to consider. You have to consider stamp duty, insurance, registration and all the other little costs that add up. If you don’t budget well, lenders might think you’re an irresponsible borrower.
3. Use a security or guarantor
Sometimes to gain approval you might have to opt for a secured loan. Secured loans place your car as collateral or security. Consequently, you risk the loss of the car should you default on the loan. If you’re a first-time borrower or a new arrival, you may have to find someone to guarantee the loan on your behalf. This gives lenders peace of mind when they agree to lend to you.
4. Compare but don’t apply
The internet is excellent for researching all the different loan products and options out there. Get as much information as you can, but certainly don’t apply. This is because an application will cause a lender or broker to potentially do a credit check. Furthermore, credit checks show up on your credit history and often cause trouble if rejected more than once or twice. When making enquiries to lenders, say you don’t want them to check your credit history until you’re 100% sure.
5. Do your credit history homework
Your credit history is often the most significant factor in determining whether you get your car loan approved. Sometimes, credit histories often contain mistakes. According to ASIC’s MoneySmart, creditors may incorrectly report defaults, fail to notify you of outstanding debts or plain forget to update their records. This leaves a black mark on your credit history that hampers your ability to gain approval. You can obtain your credit history through a credit-reporting agency. It’s your responsibility to fix any mistakes. Find out more at the MoneySmart website.