Having a vehicle is not only convenient; it is sometimes essential. What if you just landed a job after a long time being unemployed, but public transportation can’t take you there? What if you operate your own business and need a vehicle to get around? A car not only takes you places in space, but also takes you places in a broader sense. It can help you to build a future for yourself.
If you have bad credit and you need a vehicle, unfortunately you’re going to have a tough time getting approved. Lenders who look at your credit score will see you as a high-risk borrower, because you have failed to pay your bills on time in the past. If an automated system checks your application, you will probably be turned down out of hand. That doesn’t mean however that there is no hope. Bad credit car loans are available in Australia if you know where to look. Here are some tips which will help you in your search.
1. Look for a lender that doesn’t do a credit check
One idea for finding a car loan if you have bad credit is to go through a lender that doesn’t conduct a credit check in the first place. These lenders specialize in providing loans to people with bad credit or no credit up to $50k. That being the case, you will have to deal with a high interest rate if you do get approved, and there may be a lot of fees associated with the loan. If you don’t have any other options, though, at least you will have a car. Consider a less expensive car so that you can save costs over time on the vehicle.
A similar idea is to look for a lender that will run your application through manually, instead of using a computer to do it. That way you are less likely to be rejected by default when they see your credit rating. A computer has no reason to consider looking at your file twice, and will automatically put you in the reject pile. But a human being is someone you can talk to and explain your situation to. That person may be able to see why you would be a good investment.
2. Get help from community organizations
The Good Shepherd Youth and Family Service and other well-known organizations in Australia that provide help to disenfranchised members of the community may be able to help you as well. In fact, the Good Shepherd Youth and Family Service has a program called StepUp which is designed specifically to help with purchases like cars that are vital to domestic living. While they obviously cannot give you a car loan on a vehicle directly, they can provide you with a loan which you can use for your down payment. The more money you can provide up front, the more likely you will be approved for the car loan.
3. Go through a car loan broker
There are brokers who specialize in helping people in your situation to find affordable bad credit car loans in Australia. A broker knows which lenders are likely to consider helping you and which are likely to pass your application over. This saves you from submitting applications to lenders which are going to repeatedly be rejected. This in turn protects the credit rating you do have, and prevents it from getting worse (every time you apply for a car loan and get turned down, it dents your credit rating). A car loan broker is also likely to have professional connections, and may be able to talk someone into considering you who might otherwise have passed you over. There are bad brokers out there, just as there are bad lenders, so be sure you know who you are dealing with.
Be Careful When Shopping for a Low Credit Car Loan
It is important that you research any lender you are thinking of going through to secure your car loan. Not all lenders are on the up-and-up, and when you have bad credit and you are desperate to procure a loan, you are in a vulnerable position. There are companies out there that may try to exploit that. Here are some tactics you should be wary of and steer clear of:
- Overpriced “interest free” vehicles. Sometimes lenders will offer you an “interest free” loan on a new vehicle. This is a major red flag, especially if you have bad credit (but it’d be one even if you had good credit). Lenders who offer these types of loans generally overprice their vehicles, often by a significant margin. They profit from the margin and you lose. Always look up the market value of the car you are interested in purchasing.
- Some brokers will try to persuade you to modify your own financial information to try and qualify for a loan. The reason is that they’re going to be paid a commission for your sign up. But that doesn’t mean you should agree to these tactics. They are illegal, and you could be charged with fraud if you falsify your information.
- Some lenders are just bad. They may not be completely clear about loan terms, and you may not be told exactly how much you will owe. Look up customer reviews and find out everything you can about a lender before you commit, and only go forward with the process if you have read the terms and conditions very thoroughly. Don’t go with a company that tries to beat around the bush.
Finding a trustworthy lender who is going to offer you good terms for a car loan when you have low credit is not going to be easy, but if you conduct your search intelligently, you may very well be able to find something. Consider going in for credit counseling, and ask for help from community organizations. There are people out there who can provide you with personal, expert advice tailored to your situation, and they can help you to get back on your feet.