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A Walkthrough on Getting Car Loans for Bad Credit in Australia
A bad credit score might make things a bit challenging for you when planning to take out a loan to finance your car. Whilst it may not be as easy to get financing compared to when your credit rating is good, it’s not impossible. You just need to know where to look and what to look for to still get a reasonable deal. Among the options you can look into are car loans for bad credit Australia.
Aimed at people who do not have a spotless credit record, bad credit car loans will help you get the financing you need despite your not so impressive credit score— albeit at a much higher interest rate. Aside from the higher borrowing rate and the generally stricter loan requirements, there isn’t really that much difference between a bad credit car loan and a good credit one.
What’s a bad credit score?
When you get a bad credit rating, it usually means that as a borrower, you are assessed as high-risk. This classifies you as among those that are likely to default on a loan you will be required to pay regular for a while before they will talk refinance. While different agencies have their own rules when it comes to assessing and identifying how risky or not a borrower is, among the most common reasons why a credit score can be assessed as bad are:
- Late repayments
- Missed repayments
- Loan defaults
- Going over your credit limit for credit card purchases
- Sending out too many credit applications
- Getting too many rejections for your credit applications
- Bankruptcy or insolvency
Bad credit car loans— what are they?
Bad credit car loans are intended for borrowers with rather spotty credit records. This specialist loan can also be availed of by borrowers that are considered by lenders are high risk. This includes temporary Australian residents or those who are self-employed. Policies do differ from one lender to the next. It is always best to check what a specific lender’s loan requirements are to determine whether you will be qualified or not.
Is getting a bad credit car loan a good idea?
When your credit score is low, you can’t just go to any regular lender to get the car financing you need. The chances of you getting rejected are very high and in those rare instances when you do get approved, the interest rates involved may be very high. Going to lenders that specialise in providing bad credit car loans, however, might give you the opportunity to avail of a more affordable loan. The approval times may be quicker as well.
Many of the lenders offering these types of loans to bad credit borrowers also offer advice on how to manage your credit. In addition, taking out a bad credit loan may be a good opportunity for you to get your credit score up. Sticking to the loan repayment schedule may be a great way for you to escape the bad credit tag.
How do I take out a bad credit car loan?
Just because your credit is bad doesn’t mean you’ll have to give up on your dream of finally buying your own car. There are a ton of reputable lenders around who would be more than happy to extend a helping hand, a second chance make sure you check the costs on a car finance . There are certain requirements you need to meet however if you are to get approved. Just applying to as many bad credit lenders you can find isn’t a good idea either. Making sure instead that you get all the items in a lender’s requisite list ticked is the key.
Know your credit rating
Sure, you already know that your credit score isn’t going to be outstanding. However, knowing what the actual score is will at least give you an idea of the likely interest rates that you’ll be subjected to— setting your expectations in the process this is the same for all finance in Australia .
Honesty is always the best policy
Always be honest about the current state of your credit score. Lenders will appreciate it when you do not try to cover up your less than impressive credit history. In addition, not disclosing your credit score is likely to lead to your application getting rejected. So, be upfront about it.
Get your bank account in order
Lenders will take a look at your bank account to get a good idea of whether they can trust you to make the repayments or not. They’ll check too if you have their ability to set aside money and they will likely assess your discretionary spending too as a way for them to determine whether you’d be worth the risk lending their money to or not.
Have a regular income source
Earning a regular income can greatly improve your overall creditworthiness. A full time and steady income is always ideal but an equivalent one is just as good too. This helps increase your ability to pay back what you owe in the eyes of the lender.
Settle your other existing debts
If you have several unsecured debts that you still owe, it would help to pay them off too. This could be personal loans or credit card purchases. Paying them down before sending out your car loan application will greatly improve your chances of getting approved even despite your bad credit score.