A car allows you to do a lot of things like go to work, run errands, and more. People typically buy their car outright with their savings or get a car loan to get the job done. However, for some people, it’s not as simple.
Car finance with bad credit
People with bad credit have a harder time getting a car than others because lenders will refuse to approve their applications when they see their credit score.
But some companies offer car finance for those with bad credit here in Australia. You just need to work on setting your credit straight before you apply. Here are some tips on how you can get approved for a car loan even with bad credit:
Work on your debts
If you have outstanding debts, don’t add to them. Instead, work towards paying back everything. Work out a system for you and your family that will allocate part of your income towards paying back as much as possible.
Paying back debt as soon as possible help rebuild your credit and make your future applications easier.
Send applications one at a time
Speaking of applications, avoid sending multiple applications at once. The reason for this is because lenders will take a peek at your credit history each time you submit in a request. It negatively affects your credit score, so if your score is low, to begin with, it can take significant damage if lenders keep opening it.
What’s more, when they see that you’re applying for multiple loans, but your credit is bad, it raises red flags. So, be mindful of your applications and only send one at a time. Wait for their response before moving on.
Prepare your papers
During the application process, find out what kind of documents you will need. This saves the lenders time and allows them to process your application faster. It also shows them that you are responsible enough to have everything prepared beforehand.
Car finance in Australia typically requires you to submit personal identification, proof of income, employment history and references among others.
Note that some lenders will require additional documents, so it’s always best to check in with them to know the complete list of documents they need for the application.
Only choose cars that fit your income
The opportunity to drive your own vehicle is exciting. But don’t get ahead of yourself. Car prices vary. For example, if you get a large SUV, but the rate is too high for you, you might fall deeper into debt. So, instead, make it a point to figure out what kind of car fits your current income. Lenders can help you figure out the perfect vehicle that will suit your family and affordability.
Be open to other options
If the car finance application keeps failing, remember that there are different ways for you to get a car. Getting a car lease is another popular option.
A car lease allows you to drive a car at a much more affordable rate. You can choose to pay weekly or fortnightly, making it easier for those who are still trying to find their footing.
The best part is that you can return the car at the end of the term, upgrade to a newer vehicle or buy it outright for a minimal fee. You are in complete control of the situation; all you need to do is make the payments on time every time.
Keep these tips in mind when sending applications to help increase your chances of approval. Remember that just because you have bad credit does not mean that you can’t have a vehicle.