Can I get a bad credit car loan with no guarantor?

By Angela Monroe - February 1, 2018

When it comes to getting a bad credit car loan in Australia, most people consider getting a cosigner or guarantor. If the guarantor or cosigner has a good credit history, then loan applications are usually approved in no time at all.

However, if both you and your partner have a bad credit history, you’re probably wondering how to get a car loan. You’ll be glad to know that many lenders offer car loans for people with bad credit with no guarantor.

It’s possible to get a bad credit car loan with no guarantor

There’s no need to worry if you have bad credit and don’t have a guarantor to help you get a car loan. If you prove to lenders that you have the capacity to repay the loan, and your current financial position is stable, you can get a bad credit car loan even without a cosigner.

Many people with bad credit and no guarantor get a car loan every year. From work at home single mothers to full-time musicians and artists with no formal employment, anyone can get a car loan on bad credit, provided that they prove their repayment capacity to lenders.

So, what exactly do you need to do to get a car loan without a guarantor? Let’s take a look at this today.

Make sure your financial statements are in order

Before you apply for a car loan, make sure to review your financial statements and your credit report. Check for errors and get them resolved if you find any. It’s very important all the information is accurate because it is the first thing lenders will check.

Pay off existing debts

While lenders will look at your past credit history, they will also consider your current financial situation. To make your current financial situation is stronger in the eyes of lenders, consolidate and pay off your existing debts. This will show to lenders that you are financially responsible. Also, by paying off your existing debts, you’ll make it easier to repay your car loan.

Show viable income streams

The next thing that lenders will look at before approving a bad credit car loan is your repayment capacity. Again, lenders will carefully check your bank statements and your credit history to determine if you have the repayment capacity.

If you can show lenders that you have some viable income streams, you’ll increase your chances dramatically. If you have any rental income or income from working at home, you can show these as viable income streams. Any regular income will show lenders that you have some repayment capacity for your car loan.

Also, if you are receiving Centrelink payments for being unemployed, these payments can also be counted as income. However, not all lenders accept all types of Centrelink payments as regular income. For instance, some lenders accept Family Tax A and B as regular income but don’t accept Newstart Allowance. Before applying for a bad credit car loan, make sure to check if lenders are willing to accept your Centrelink payments as income.

Offer a down-payment

If you don’t have a guarantor to co-sign your car loan application, you can increase the chances of your loan getting approved by offering down-payment to lenders. With down-payments, you are likely to get better terms and conditions and possibly lower interest rates on your car loan.

However, it is not possible for everyone to offer a down-payment, especially when you have bad credit. So, even if you can’t afford a down-payment, don’t worry. The chances are that you may still be able to acquire a car loan – just that it may be slightly more expensive.

Be honest with your application

Finally, when you apply for a bad credit car loan, make sure to be completely honest with your application. If you fake your financial position by manipulating numbers, lenders may notice this and disapprove your loan. Remember – many people in Australia get bad credit car loans with no guarantor, so you don’t need to take this path.

When you apply for a bad credit car loan with no guarantor, you will need to do all of this beforehand. However, if you feel that dealing with credit history and financial statements is too much work, you should get the help of professional consultants. Professional experts can get your financial statements in order, and they’ll also explain all the details of how you can get a loan.

Things to know about bad credit car loans with no guarantor

There are many things you should know about applying for a bad credit car loan with no guarantor. First, you must understand that the typical interest rates for car loans on bad credit in Australia range between 10 and 20 per cent. However, if you apply for a car loan on bad credit with no guarantor, you can expect interest rates to be on the higher side.

The interest on car loans for people with bad credit and with no guarantor also depends on the loan duration. If you opt for a longer repayment period, you will have to pay much more in interest amounts.

Another important point to know about a bad credit car loan is secured loans. Some lenders only offer secured car loan applications for people with bad credit and no guarantor. These loans are usually less expensive than unsecured loans as the lender takes an interest in the car for the duration of the loan, and if you do default, they can recover the loan money by selling the car.

The only catch is that you’ll need to buy a car that’s less than seven years old. If a secured car loan doesn’t work for you, you can choose a no-deposit car loan. You should talk to a professional consultant or finance broker who can help you find the best option for your needs.

Apply for a bad credit car loan with no guarantor today!

There’s no need to delay applying for a car loan even if you have a bad credit history and no guarantor. Several lenders may still offer you a bad credit car loan. Just keep in mind that the interest rates for loans without a guarantor may be higher than regular bad credit car loans.

And, to increase the chances of your car loan getting approved, make sure to talk to professional consultants today!

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.

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