A bad credit car loans is a broad term used to describe a range of loan products designed to meet the needs of people with poor credit histories or others, who, due to circumstances, may find it difficult to access finance for a car from a traditional lender, like a bank.
Bad credit car loan products are ideally suited not only to borrowers with low credit scores and/or defaults, but also people with little to no credit history, part time and casual workers, the self employed and customers who are ex-bankrupt or in a Part IX debt agreement. Bad credit doesn't have to be a barrier to car finance and we are experts at helping people with credit issues.
Think you've got bad credit but not sure? Our experience shows that most people who think thy have bad credit actually don't and the best way to find out is to complete our 2-minute finance app. On completion, we can advise of your credit status and help you secure the right loan for your circumstances. If you do have bad credit don't stress. Since 2008 Ausloans has been helping Australians overcome credit issues with lender products designed to get you behind the wheel of a car when you have bad credit.
Our professional brokerage team understands your pain and are experts in securing financing solutions for people with less than favorable credit histories. With access to a large pool of specialist, bad credit car loan lenders we have solutions to get you the best car loan for your circumstances.. Let us help you turn your bad credit history past into a good credit history future.
As bad credit car loans are designed for people who have been declined by lenders because of credit defaults, judgements, bankruptcy or part IX debt agreements, these types of loans come with a range of borrower asset purchase restrictions and limits on the type of vehicles that can be purchased. While each lender is different here are 6 common characteristics of a bad credit car loan. Before deciding that a bad credit car loan is not right for you make sure you read our section on why you should consider taking a bad credit car loan, even if the interest rate is higher than you anticipated.
Bad credit car loans typically have higher interest rates than traditional car loans
Most lenders will a place cap on the total amount you can finance with a bad credit car loan
Loan terms are generally from 1-7 years, however some lenders may restrict the length of the loan.
While not always essential, lenders may require you to have a cash deposit to offset the cost of the loan
Credit and loan fees vary between lenders and some lenders may charge higher fees.
Lenders may require you to submit extra documentation to prove your capacity to service the loan. e.g. Payslips, utility bills,
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Our lenders understand that life sometimes throws you a curveball that impacts your credit score and ability to secure a car loan, but your financial past doesn't have to be a roadblock to future financing success. Here are 7 tips to help you secure the finance you need.
When you apply for a bad credit car loan lenders conduct thorough credit checks across multiple databases and transaction records. Establish credibility and good character by being honest with your answers. To assist you lenders need to know your history and unexpected suprises can damage your chances of success.
One of the key requirements for bad credit car loan qualification is serviceability. Lenders will look for a stable employment history, usually, at a minimum 6 months of continuous employment in the same job. This shows the lender that you can both hold down a job and earn a regular income to meet future loan repayments.
Your banking conduct is important. Try to avoid draining your bank account of all available funds on paydays. Lenders like to see that you have some savings, even if small.
While it may be tempting to take out a payday loan when things are tight this is one of the biggest red flags for lenders. Payday loans indicate that you are struggling to manage your finances. Avoid them at all costs. Increase your chances of getting approved. Learn more about payday loans here
Most lenders will place restrictions on the total amount you can finance using a bad credit car loan. Apply for a large loan and you will probably be declined. An acceptable loan amount would be in the range of $10 000 to $35 000.
While not a prerequisite for obtaining a bad credit car loan a deposit can really help you get approved. Having a deposit of around 10% of the total value of the vehicle shows lenders that you are financially responsible and have the ability to save.
Alternatively, trade in of any kind can also be considered a despot and this helps show the lender that you are as committed to the loan as they are which intern reduces you as a risky client. Learn more about deposits.
If you've got multiple bad credit marks on your credit file you may want to consider credit clean or credit rehabilitation before applying for a loan. credit rehabilitation helps prove you're a good client now and pay your loans as it falls due.
Popular Questions and Answers
A bad credit car loan is a specialist car loan for borrowers with a checkered credit history.
Credit scores are usually calculated using a number from 0 -1000 with 1000 indicating an excellent credit history. Most lenders consider a credit score of below 600 as an indicator of a bad credit history.
The simple answer to this is no. A bad credit history in the past doesn't prohibit you from accessing a car loan if you can afford it.
The key is that your circumstances are now different from when you last defaulted on existing repayments. As long as you meet the lenders eligibility criteria and have sufficient earnings to pay back the loan amount there are a number of lenders willing to give you a second chance.
With that said, taking actions to improve your credit score is something we highly recommend. Starting with a bad credit car loan is a step in the right direction. Paying back the loan on time can help improve your credit score and give you access to better rates and lower repayments in the future.
A deposit is not required to obtain a bad credit car loan. However if you have saved a deposit this will work in your favor and also allow you to purchase a vehicle of higher value.
As bad credit car loans are for borrowers with higher risk you can expect to pay higher rates. At Ausloans we have partnered with several bad credit car loan lenders who offer rates from as low as 10% however in most cases be prepared to pay more.
As with all car loans first you will need to provide and confirm confirm your contact details, address, employment details and a breakdown of your regular expenses.
Additionally, due to responsible lending laws . you will be required to provide at a minimum 3 months (90 days) of bank statements which you can upload digitally though the Ausloans online app.
Like all lending products there are both advantages and disadvantages of bad credit car loans.
The short answer is yes, however all lenders are different so depending upon the lender and the term of the loan you mat be subject to early exit fees.
Refinancing any loan is always an option however before considering refinancing your bad credit car loan make sure you have been meeting both your car loan repayments and regular bills and credit card payments without default. When you refinance you will need to prove that your financial situation has changed and that you are now in a better position to service a loan.
Got bad credit and not sure if you should take that bad credit car loan? We outline the pro's and con's of bad credit car loans and offer our professional advice on why you should seriously consider using a bad credit car loan to help you fix your credit challenges.
If you have experienced credit issues in the past, lenders are going to be more cautious about both the amount they are prepared to lend you and the rate they are prepared to offer. Your credit history indicates hat you are a high risk customer so expect higher interest rates.
Most lenders will also place restrictions on the type of vehicle you can and cannot purchase, with the preference to be around newer vehicles. While every lender is different a rule of thumb is the newer the better. Lenders want to know that in the event of default they can repossess the vehicle and recoup their money.
Finally expect the lender to request more detailed loan documentation in the form of extended bank statements, tax records and / or payslips.
With higher interest rates, vehicle purchase restrictions and obviously higher repayments you are probably thinking what are the pros of accepting a bad credit car loan.
Firstly, with a bad credit car loan, you can solve your immediate problem - funding your car purchase, but this isn't the only advantage. Accepting a bad credit car loan can help you fix your credit problems so you can enjoy better rates and lower repayments in the future.
Sure the rates and repayments on offer are far from ideal but accepting the loan and servicing it without default for 12 months is the fastest way to repair your damaged credit score.
Meet your repayments without default and we can usually help you refinance after 12 months with massively improved rates and repayments.