Bad credit car loans, also known as second chance car finance, will not only get you behind the wheel of a reliable, late model car, one of these loans can also help you repair a bad credit history.
It doesn’t take much these days to end up with a bad credit rating in Australia. Pay a bill after the due date and you could end up being labelled ‘a late payer’ by the various credit reporting agencies. Once that happens, you could wait up to 7 years for a late payment or default to be removed from your credit file and in the meantime, you’ll be unable to make any major purchases, such as a new car.
Once you have a bad credit rating, it can be very difficult, if not impossible, to access any type of credit or finance from traditional lenders, such as the banks. Which begs the question: ‘How can I fix my credit rating if no-one will give me a loan?’
Even if you’ve sworn off borrowing money forever, unless you’re lucky enough to win the lottery, sooner or later, you’re going to need access to finance. One of the most common reasons for making a loan application, is to buy a car.
There was a time, not so long ago, when most people with a bad credit history couldn’t get car finance. Those who were able to get it, usually had to pay a very high interest rate. Today, getting a bad credit loan will mean higher interest – the lender is taking a larger risk. But interest rates are much more competitive than they have been in the past, getting a finance broker to help you will not only increase your chances of getting the loan, but they will generally get you a lower interest rate.
People with a bad credit history are able to get a car loan from a finance broker such as Loans for People with Bad Credit with an interest rate starting from just 6.49% p.a. Loans for People with Bad Credit are Australia’s #1 second chance car finance company, with 80% of Car Loan Applications Approved.
While companies like this will do everything they can to get your application approved, there are also things you can do to maximise your chances of getting the application approved.
Getting Your Loan Approved
Here, are some of the lesser known factors lenders take into account when deciding whether to approve a bad credit car loan.
Be honest about your situation. No matter how bad you think your applications looks, a truthful application is more likely to be approved. If a lender discovers you have been dishonest on your loan application – and in most cases they will find out – you could be seen as someone who cannot be trusted and no-one lends money to someone they can’t trust.
Check your credit file is accurate. Unfortunately it’s quite common for errors to appear on a credit file held by one of the credit reporting agencies in Australia. Correcting any reporting errors and requesting wrong information be removed from your credit file, can dramatically increase your chances of having a car loan application approved.
Don’t let your bank account become overdrawn because this can make it harder to get your loan approved. You will need to be able to show the lender bank statements without any overdrawn balances for a minimum of 3 months.
Your employment history and job status does matter and you will need to show proof of income. If you’re a casual worker, a record of 12 months or more in the same job will be very advantageous when applying for a bad credit car loan.
Having stable accommodation is also necessary as people who move regularly are considered to be financially unstable and therefore, not a good credit risk.
Many people with bad credit believe they have no options, however this could not be further from the truth. If you follow the above recommendations and focus on taking control of your finances, you will generally find a way to get finance. Don’t forget that even if you are declined by a lender, if you have a quality finance broker helping they should give you some tips about how to increase your chances of getting approved in the future and having greater success!