Credit history is a significant factor in getting approval for a car loan, and also affects the interest rate for financing on the purchase. Bad credit car loans 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. Continue reading to learn how to get car finance with bad credit.
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, not to be taken advantage of.
Brisbane car brokers like eCarz offer flexible car finance deals, even if you have a bad credit rating.
Here’s How to Get Car Finance with Bad Credit
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 affordable and accessible car finance from over 30 lenders, including major banks and finance companies, at competitive rates. We have experience in helping our customers obtain car finance to purchase the car of their dreams, even if they have bad credit.
Tip 2 – Do you need those extras?
Buying a car, with good or bad credit, may mean a low loan approval amount. You may have to give up some of the features you would otherwise like.
Test all of your willpower and think – do you 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 don’t need.
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 a reduced loan amount. Making a larger downpayment can help to offset the interest, fees, and taxes. Consequently increasing the choice of cars available to for you choose from; 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. 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. These type of loans more often than not have high-interest rates and often end badly for the car buyer, damaging their credit record even worse than before.
Make sure to get all the facts, conditions, and interest rates. Take some time to look over them with a level head. Make rational financial decisions when looking for the best car finance deals, do not decide based on emotion or fear.
Tip 5 – Don’t take on additional bad credit
Be on your best behaviour in the months leading up to your loan application. The Office of the Australian Information Commissioner can provide helpful information and advice about your finances and a credit report. In essence, don’t accept any large new credit offers, such as a new credit card, for the months leading up to your finance application. Make sure to pay all of your bills on time to help your car loan broker. The fewer objections concerning your application, the better. It will also reduce the amount of potential red flags like 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 than you are already experiencing on yourself.
First work out how much extra money you have 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 to get a clear indication of how much you can comfortably afford. Even if you get approved for a higher amount of finance lease with larger repayments, stick to your budgeted amount.
Tip 7 – Read the paperwork, twice, and get a second opinion
Finance documents can be quite lengthy, and confusing, not to mention dull. It is essential to make sure you understand the terms of the loan offered by the finance broker. Have a friend, or family member read over those terms 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. Sketchy dealers have been known to run scams where they let you drive the vehicle away without signing the finance lease documents. Then, they call you to come back in to sign a contract containing severely different terms than what you agreed to.
If you want a second opinion, we’ll give you impartial advice. What’s the worst that could happen, other than our team at eCarz confirming whether 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 reporting services. Checking your credit score and cleaning it up before you apply will improve your chances of successful approval. 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 bad credit car finance. Make sure you do your research, don’t settle for the first offer you receive, and compare loan terms instead of monthly repayment amounts. With discipline, and opting out of luxury add-ons, you could be driving away in the car of your dreams.
eCarz is a car finance specialist in Brisbane, highly reputable and offering easy car finance at competitive rates. 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, including a quick and convenient option comparison, quick finance quotes and approvals. Obtaining car financing has never been easier!