How to Get Car Financing with Bad Credit

By Angela Monroe - December 30, 2019

Do you have bad credit but keen to get car finance? You’re probably a bit daunted by the idea of bad credit car financing – but don’t panic. There are ways to get the right car finance for you regardless of your credit rating. Bad credit shouldn’t be an obstacle to you getting out on the open road with the car that you want.

What is bad credit?

It’s important that you know your credit rating. If you have bad credit, most people will have an idea of this – yet some people genuinely don’t realise until it comes to getting car finance – at which point it’s a nasty shock. So it’s best to be as clued up as possible about what bad credit is and what your current credit score is.

Bad credit usually relates to a record of your failures in the past to keep up to date with payments on credit agreements such as loans and credit cards. Defaulting on loans or consistently making late payments can hurt your credit score (calculated by reporting bodies such as Equifax or Experian) and result in your inability to get approved for new credit.

You may also be looking into bad credit car financing if you have previously been declared bankrupt or had legal judgements made against you, which can affect your credit score. 

What is bad credit car financing?

Bad credit car financing enables people with a bad credit score or a poor credit history to get car financing. Often, lenders will reject people with bad credit – on the basis that they don’t think that the loans will be paid back. People with bad credit often also face high-interest rates or inflated loan prices from lenders – often leading to further problems as these can mount up and be harder to pay back.

The good news is that bad credit car financing can be a really positive thing. You can see it as the start of your journey to getting back on track with your credit record.

Perhaps you need a car to get to a new job with a regular salary, which will then help to improve your appeal to lenders. Bad credit car financing can make all sorts of things possible and it’s important to know that there are options out there for you.

How to apply for bad credit car financing

  • If you are currently declared bankrupt, you may have to wait before you apply for bad credit car financing. Many lenders will require you to wait a full nine months after your bankruptcy before they offer you bad credit car financing.
  • Check your credit score is as high as it can be. You can check your credit score easily, quickly and for no charge on a number of sites such as Experian and Equifax. Once you know your credit score, you’ll be able to better understand the type of bad credit car financing that you may be offered. If your credit score is very low, you may want to wait a few months to try and improve it before you apply for your car finance.
  • You’re likely to have much more success with bad credit car financing if you apply when you are in regular employment. Lenders will be reassured if you can offer them evidence of at least 3 months payslips showing a regular salary into your bank account.
  • Understanding the different types of bad credit car financing could help you to figure out which option may be best for you. This will depend on your circumstances such as your current cash flow, your financial circumstances, what your monthly expenses are and what money you have coming in on a regular basis. Do your research to understand the bad credit car financing options that may be available to you.
  • Do not make multiple loan applications in a short space of time. Lenders will see this as a red flag. It’s easy to panic and try and get as many bad credit car financing options as you can but take your time and only make an application when you are sure it’s right for you.
  • Find a lender you trust. This can be easier said than done but it’s very common for people with bad credit to be taken advantage of. The right lender will clearly talk you through all the bad credit car financing options available to you and help find the right one for you.

 

 Loans for People With Bad Credit have years of experience helping people with bad credit to get the car financing options that they want. Contact us today to see how we can help save you time, money and unnecessary stress. 

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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