Credit history is a major factor in getting approval for a car loan, and also affects the interest rate for financing on the purchase. Getting car finance with bad credit can be quite challenging, even with a stable job history with a good salary. Unfortunately, the lender sees a history of high debt and late payments as a sign that you’re a high risk of default on loan payments.
How to Get Car Finance, Especially with Bad Credit
However, just because you have poor credit, it doesn’t mean that you can’t buy a car. Instead, you’ll have to make some sacrifices and also be prepared to have to pay a higher price. The trick is to be as informed as possible, to not be taken advantage of.
It is possible to find car brokers in Brisbane, Melbourne, Sydney, and all around Australia who offer flexible car finance deals, even if you have a bad credit rating.
Here are some tips to help you get your car finance in Brisbane approved
Tip 1 – Find a reputable car loan broker
Being able to trust a car broker is the key to not being scammed or taken advantage of.
eCarz offers easy and affordable car finance from as low as 4.79% and offers a choice from over 30 lenders, including major banks and finance companies. We are experienced in helping customers to obtain car finance to purchase the car of their dreams, even if they have bad credit.
Tip 2 – Do you need those extras?
When buying a car with good or bad credit, it may mean that the amount of the loan approval is rather low, resulting in the need to give up some of the features you may wish to add.
Test all of your willpower and think – do you really need the sunroof, leather seats, and state of the art speaker system. If you have previous bad credit, the loan payment will already be higher due to an increased interest rate, don’t make it unmanageable by adding extra features you can live without.
Tip 3 – Consider a larger cash deposit
Having a bad credit history will require you to pay a higher interest rate which will lead to the size of the loan amount being reduced. However, making a larger down payment can help to offset the interest, fees, and taxes while also increasing the choice of cars available to choose from while giving you more options with a loan.
Tip 4 – Look out for scams!
Unfortunately having bad credit can leave you exposed as the target of endless scams. Just because you have bad credit, doesn’t mean you have to take the first loan which is offered to you by a bank or finance company. This is where a good Finance Broker can work wonders!
No matter how badly you need or want a new car, don’t give in to a predatory loan, as these type of loans more often than not have unconsciously high-interest rates which often end badly for the car buyer, resulting in damaging a credit record even worse than it was before.
Make sure to get all the facts, conditions, and interest rates, and take some time to look over them with a level head to enable you to make rational financial decisions enabling you to get the best car finance deals, rather than one based on emotion or fear.
Tip 5 – Don’t take on additional bad credit
Leading up to applying for a loan, try to be on your best behaviour for the months before your application. The Office of the Australian Information Commissioner provides helpful information and advice for you about your finances and credit report, but essentially don’t take any large credit offers, such as a new credit card for those months leading up to the finnace application. Also, make sure to pay all of your bills on time. This will help to give the car loan broker fewer objections in regards to your application, and also to reduce the amount of potential red flags which often include late rent payments, debt collections, charge-offs, bankruptcy, and lawsuit judgements.
Tip 6 – Know your budget, and stick to it
It can be tempting to overestimate the amount you can afford to repay so that you can purchase a better and more expensive car. But doing so can lead to putting even more financial strain on yourself than you are already experiencing.
First work out how much extra money is leftover each month after paying all your bills, then use that as the base amount for how much you can afford. Factor in your budget and that will give you a clear indication of how much you can comfortably afford. Even if you get approved for a higher amount finance lease with larger repayments, stick to your budgeted amount.
Tip 7 – Read the paperwork, twice, and get a 2nd opinion
Finance documents can be quite lengthy, and confusing, not to mention boring. But it’s very important to make sure you understand the terms of the loan offered by the finance broker, or to have a friend or family member read over them for you. Then make sure that what you verbally agreed to with the car broker matches what the paperwork says.
Only sign the loan documents if you agree to all the terms, and make sure you do so before driving the car off the lot. Some sketchy dealers have been known to run scams where they let you drive the car away without signing the finance lease documents, then call you to come back in to sign a contract containing severely different terms than what was agreed to.
If you want a 2nd trusted opinion, we’ll give you impartial advice, what’s the worst that could happen, other than our team at eCarz confirm you have a great deal!
Tip 8 – Know your credit history
Once you decide to buy a new car, it’s best to check your credit report ASAP. Veda, D&B, and Experian all offer free credit report services. By seeing your credit score, and trying to clean up your credit before you apply for car finance, it will help you get the best chance of being on good terms leading to being approved for your car loan. To clean up your credit, you should pay off past due accounts, add positive information to your credit report, and dispute and credit report errors.
Are you ready for the next step?
Just because you have a credit problem, doesn’t mean you don’t have options for taking out car finance with bad credit. Make sure you do your research first, don’t settle for the first offer you receive, and compare loan terms instead of monthly repayment amounts. With some discipline, and not opting for luxury add-ons, it is possible to be driving away in the car of your dreams.
eCarz is a specialist in Car Finance Brisbane who is highly reputable and offers easy car finance starting from a low 4.79%. In partnership with 1800 Approved, we offer a choice of over 30 lenders, and provide flexibility to suit your needs, while providing the best deal possible.
eCarz offer obligation-free and sound financial advice which includes a quick and convenient option comparison, and quick finance quotes and approvals. Obtaining car financing has never been easier!