The In’s and Out’s of Bad Credit Car Loans

Just because you have had issues in the past that may be noted on your credit file, does not mean that every lender will not give you a second chance. Cale Sammons from www.carloans.com.au/ states;

If you can show that you have improved your situation, or have a reasonable explanation for any defaults on your credit file, there may still be options to help you get into a car.

Generally what the lenders will be looking for if you have any adverse credit rating is to show that you are able to conduct your own finances in a way that the lender would feel comfortable lending to you and they will usually determine this from the conduct of your personal finances by reviewing your bank statements. They would usually be looking to see in a set period if you have had any overdrawn amounts on any of your accounts, meaning your bank account has been put into a negative position, or any direct debit dishonours.

When the lender reviews your credit file, they will be able to see any enquiries you have made. One big mistake made by people trying to improve their credit history, is the belief that they should go for a ‘small’ loan first to see if they can get approved and then work their way up. This does make sense, but unfortunately the lenders take a different view to these ‘small’ borrows, as they are often ‘payday lenders’. These ‘payday lender’ enquiries raise concern for motor financiers as their argument is that if the client cannot afford to live off their wages and needs to go to these type of lenders, they may be struggling to live off their normal income, so how can they afford a car loan repayment on top of what they require to payout in expenses? It is wise to stay away from these lenders prior to looking to apply for motor finance.

Dependent on the severity of the adversity on your credit file, you may still qualify to achieve approval from a prime lender, meaning that you may not be required to pay substantially higher on your interest rate. It is wise to talk this through with a professional, as they should know each and every lender’s guidelines in detail and can advise accordingly.

The only exception in most circumstances would be if the client is currently undischarged from a bankruptcy or a Part IX Debt Agreement (one of the most known providers of Part IX Debt Agreements is Fox Symes and may be ‘sold’ as a debt consolidation). In these cases it would be almost impossible to obtain motor finance and the client would need to have their bankruptcy or Part IX discharged and usually discharged for a minimum of 12 months.

If you have any concerns about your credit file or history and are looking to purchase a new vehicle on finance, now or in the near future, it is recommended to speak to a qualified professional in order to see if you qualify now, and if not, that professional can assist in the steps and time frames to assist you to rectify your credit history. Once you have your ‘foot in the door’ again, it becomes easier and easier to obtain motor finance and you put yourself in a better position to obtain a better deal as you may have more options once you have conducted your loan account perfectly.

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Creative Commons images courtesy of  Alan Cleaver: http://www.flickr.com/photos/alancleaver/