Tips on how to get a car loan with really bad credit

By Angela Monroe - June 25, 2018

When it comes to credit score, some Australians sit on the lower end of the scale. But even with a poor credit score, plenty of people secure bad credit car loans every year.

Even if your credit score is extremely low – within the range of 300 – 400, it is still possible for you to secure car financing. In fact, securing car finance with really bad credit may be easier than you think! But do understand that you’ll have to deal with higher interest rates.

To obtain a car loan with really bad credit, you need to apply with the right lender. Certain specialty lenders in the market offer loans to people with really bad credit provided that they fulfil certain criteria.

You should seek the help of a professional consultant to help you understand what such lenders look for in loan applications. Consultants will also direct you to the best lender for your requirements.

Let’s take a look at some tips that will help you obtain car finance with really bad credit.

1. Stay away from bad credit personal loans and payday lenders

Even when you suffer from really bad credit, you can always secure a small bad credit personal loan or a loan from payday lenders. However, you should not resort to such loans. That’s because bad credit loans, as well as payday loans, are unsecured loans with very high interest rates.

Also, payday loans and bad credit personal loans will negatively impact your credit score, even if you do pay off the loan in time. This will make it even more difficult for you to secure car financing.

The large amounts of interest with bad credit personal loan and payday loans is significant. This money will be spent much better as a deposit for securing a bad credit car loan.

2. Manage your finances

A key to securing car finance with really bad credit is to show lenders that you are financially responsible. If lenders see that you are managing your finances well and have a history of saving, then they may offer you a loan despite your bad credit score.

Also, make sure to have a payment plan in place for your existing debts. Even if you’re saving a small amount every week, it will show lenders that you are committed to making a change.

3. Maintain good conduct with your bank account

In addition to saving for a deposit for your car loan, you should also avoid bank reversals, overdraws, and dishonours. Ensure that you have enough money available in your account to cover all your direct debit bills. Any missed payment will reflect very badly on your credit score.

Also, make sure to check your balances before you make any withdrawals. That way, you’ll know whether you’ll be overdrawing or not.

4. Be honest with your loan application

The worst thing you can do when applying for bad credit car loans is to be dishonest with your loan application. If lenders suspect that you are dishonest, they will reject your application outright. And, getting a loan rejected will negatively impact your credit situation further.

Always ensure to be completely honest with your loan application. Accept that you have faced financial difficulties in the past, but you’re willing to change for the better. Show good character and be honest and lenders will consider your situation.

5. Check your credit history

It is also a good idea to check your credit history for any errors before you apply for a car loan. If there is an error in your credit history, make sure to inform your credit agency about it. Getting errors rectified from your credit history will give a boost to your credit score. This will increase your chances of securing car financing.

Also, in certain cases, it is possible to get defaults removed from credit history. If you think that your credit history contains any defaults, find out if those defaults can be removed.

6. Seek the help of professional car finance consultants

Obtaining car finance with really bad credit is quite difficult. While you’ll need to do some research to find the right lender, you’ll also need to manage your finances, check your credit history and negotiate rates with lenders. Not only is all of this time consuming, but it can be very stressful as well.

You can simplify the work by seeking the advice of professional car finance consultants, such as Loans for People with Bad Credit. Our consultants help people like yourself secure bad credit car loans all the time.

Just talk to one of our experts about your loan requirements, your current financial situation and any credit problems you may have faced in the past. Our experts will assess your financial condition and help you present the perfect loan application to lenders. Our consultants will also direct you to the best lenders and even negotiate rates for you.

We have a reputation for matching people suffering from bad credit to the best lenders for their needs. Regardless of how bad your credit score is, you can count on us to help you find suitable car financing.

To talk to one of our expert car finance consultants, get in touch with us 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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