How much can I borrow if I have bad credit?
If you’re on Centrelink payments for part of your income, chances are that you may have a bad credit profile. In this situation, you may not be able to qualify for a regular car loan.
Fortunately, many banks and lenders are willing to offer bad credit car loans in Australia. You have several ways to get the loan amount you want, regardless of the credit situation you’re in.
But, the real question that you’re probably asking is: ‘how much can I borrow on bad credit?’ Let’s take a look at this today.
You can get a car loan even with bad credit
There are many ways to get a car loan, even if you have a bad credit history. However, you must be able to prove certain things when you apply for a car loan. Lenders will consider your credit history and repayment capacity before offering you a loan on bad credit.
First of all, review your credit report and resolve any errors you find. Lenders will take a look at your credit history before offering a loan, so it is important all the information is correct.
Also, lenders will only offer you a bad credit car loan if you can prove you will be able to pay back the loan amount. To do this, lenders will go through your bank statements and your credit history carefully. However, you can help speed up the process by showing any viable income streams.
If you work from home, provide freelance art services, or have a rental income, these can be shown as viable income streams. You can use any regular income to let lenders know you’re able to repay a car loan.
If you have a spouse or partner with a good credit rating, you can apply for a car loan jointly. This will dramatically improve the chances of your loan application being accepted.
If you receive Centrelink payments, then these payments may also count as part of your income. Disability support pension payments and family tax A and B both can be considered as your regular income. However, not all lenders accept certain Centrelink payments, so it’s best to check with a broker before applying.
Another important point to remember when applying for a car loan is to be honest with your application. Don’t hide your true financial position or fudge numbers—it will only work against you. Remember, thousands of people get bad credit car loans every year, so there’s no need to cook your books.
If you have any existing debts, you should pay them off before applying for a car loan in a bad credit situation. Consolidating your debts will show lenders that you are financially responsible and it will also simplify repayments for you.
There is certainly some work involved when you apply for a car loan with bad credit. If reviewing your financial statements or dealing with credit history seems like too much work, then you should consult a professional. Professional consultants can help you understand the process and concepts related to bad credit car loans.
How much can I borrow on bad credit?
“How much can I borrow when I have bad credit” is a very common question, and the answer depends on several factors. Interest rates for bad credit car loans typically vary from 10 to 20 per cent here in Australia. If your current financial situation is somewhat stable, you can get lower interest on your car loan.
To help you understand how much you can borrow on bad credit, let’s take a look at some examples.
Case Study: Single Mother with Discharged Bankruptcy
First, let’s consider the case of a single mother in her late forties who is employed but has a discharged bankruptcy. She has had bad credit for many years due to her discharged bankruptcy case. However, she can still apply for a car loan by focusing on her strengths and not her weaknesses.
By showing that she is employed and that her current financial situation is not as bad as her credit history suggests, she can get a loan from almost any lender. By filing a proper application with the help of experts, she can get a loan of $30,000 at a 10 per cent interest rate over three years.
Case Study: Unemployed Without Liabilities
A man in his early forties who is unemployed and on Centrelink benefits. Because of unemployment, he too has bad credit. However, he does not have any debts to pay off, nor does he have to pay rent because he lives with his partner. In this case, he too can apply for a car loan from many lenders by showing that his current financial situation is not too bad and that he can repay the loan. Professional consultants can help him find a loan of up to $30,000 at a 15 to 20 per cent interest rate for three years.
These examples show how most people with bad credit can get a car loan, provided you can prove your repayment capacity to lenders. The loan amount, interest rate, and duration of the loan will differ from one lender to another, and it will also depend on your personal circumstances. But, if you take the help of professional consultants, you should have no trouble in borrowing.
Apply for a bad credit car loan
Even if you’re unemployed and have bad credit, you can still get a car loan. To increase your chances of approval, take the help of a professional consultant who can also help you understand how much you will be able to borrow.