Applying For A Car Loan With Average Credit

Owning a car can open doors to new opportunities. There are plenty of reasons why you might need to get a car (or upgrade to a newer or larger model!). From driving to and from work, needing more room for an expanding family, or you’re simply heading out on your next big adventure, your car is a symbol of personal independence and freedom. 

If you’re ready to start looking at what’s out there on the market, but need a little financial help to get you there, we can help clear some things up. Let’s look at everything you need to know about applying for a car loan with average or below average credit. 

Can I get a car loan with below average credit?

Having less than perfect credit is very common, with things like loan history and late payments causing fluctuations in your credit score. If you’re worried about being able to get approved for a loan again in the future, don’t lose hope. There’s a misconception that once your credit history has defaulted, getting a personal loan, car loan or used car loan approved is impossible. However, at Rapid Loans, we understand that a small financial mistake in your past or an unexpected change in circumstance may have just caused your credit rating to take a hit. Financial stability isn’t out of reach, it’ll just take some patience to get things back on track, and we’ve already helped thousands of Australians fund their dreams along with providing solutions like debt consolidation for people who owe money to a number of different lenders. 

We’ll take your whole situation into account when assessing your application – not just your credit score.  We offer secured online car loans from $2,001 to $45,000 and have made sure the entire application process is simple, fast and secure. You can complete your application online, and if you’re unsure about how anything works (or what you need before getting started) our team is on hand to help. 

Even if you have a below average credit score you may not automatically be ruled out for a loan, including a used car loan or private sale car loan. You’ll also need to provide supporting financial information with your application. 

Here, we’ve compiled some tips to help get you on the road, even if your credit score is currently considered average or below average. 

How do I improve my credit score? 

If you have a low or less than average credit score, lenders will look at a range of factors when considering whether you are a suitable candidate for a car loan, including used car loans. It’s worth understanding that applicants with a below average credit score might not be able to access the same amount or interest rates that a borrower with a good credit record would. With that in mind, here are some ways you can look to improve your credit score: 

Limit your loan applications

It can be tempting to cast a wide net and apply with a number of lenders to see what you can get. The issue with this is that each application you make actively contributes to your credit score, meaning if your credit score is accessed by three lenders, it’s going to make it more challenging to get approved elsewhere in comparison to only having a single application recorded on your report.  The reason behind this is that all loan application enquiries stay on your record for five years, whether you are approved or not, even if you don’t continue through to signing a contract. Take time to understand the lender’s assessment criteria instead. It may even be worth contacting the lender to make an initial enquiry as a full application will likely be recorded on your credit history. This could save you from applying for a loan where you’re unlikely to be approved. 

Pay your bills on time

We recommend developing good financial habits like putting money into savings regularly and building up a record of on-time payments by automating repayments and bills. Paying your bills will definitely go a long way in improving and maintaining your credit score. This includes everything from your phone plan to your household utilities – making sure things are well managed and on time reflects well on your financial habits and in some cases could help to improve your credit score if the institution uses comprehensive credit reporting (CCR). 

Get on top of payments

Poor payment habits can be a warning sign to potential lenders that you may be under financial stress. Financial institutions will look for red flags such as late payments, outstanding debts, tax liens and bankruptcy. Your loan repayment history stays on your record for two years, and if you have missed bills that are more than $150, and have been overdue for at least 60 days, a default can be listed on your credit report that will stay there for at least 5 years. 

Having too many loans to your name isn’t a good look because it puts in question your ability to manage and repay all of them at once. Things like AfterPay, credit card debt, and missed payments on things like a car loan can all contribute to this. However, if you’re struggling with multiple repayments, there could be a solution! 

Debt Consolidation

One of the reasons many people get behind on their payments is because they’ve taken out loans with a number of different lenders. This can mean different dates to make repayments, variable terms, and variable interest rates. Debt consolidation might help you reach a more organised and financially stable situation if you have multiple outstanding debts. With Rapid Loans, you can add up your varied debts and apply for a fast personal loan to consolidate your debts. If approved, this means you only have to make one payment a week or fortnight instead of numerous payments. This also takes a little strain off your schedule as you know exactly how much money you owe in total, when it’s due, and how long you’ll need to make repayments for. 

Consider lowering your lending amount

As applicants with a below average credit score may not be eligible for a large car loan, including car loans for private sale or used car financing, instead opt for a model of car or used car that fits your budget. This means you might have to skip the lavish features for now! By opting for something a little more affordable and at a lower price point, you’re more likely to be able to get approved, but you’ll also be better off when it comes to making repayments on time as they’ll be more manageable for your current financial situation. 

Our friendly loan representatives can help you find suitable variables such as loan size, loan term and interest rate, providing you with an estimated weekly, fortnightly or monthly loan repayment. We’ll ask for information like how much you want to borrow and how often you get paid. Keep in mind this is only a guide for what your loan repayments might look like.

How to support your car loan application

It’s worth keeping in mind that your credit score is not fixed. You can help your approval chances for a car loan in many ways. Here’s where to start:

• Demonstrate regular payments for your current financial commitments and pay off any existing debts or outstanding dues. 
• Clean up your credit and avoid taking on any additional credit obligations. 
• Consider lowering the limit on any credit cards you have.
• Be prepared to submit 90 days of bank statements that detail your income and expenses. This will show the lender how much of a burden a loan will place on your current living expenses. 
• Your lender will also look for stable employment, so it’s an advantage if you’ve been in your current job for at least 6 months. It’s also helpful to wait until you’ve passed your probationary period before applying for a new loan as this gives you more stability and credibility when it comes to your ability to make repayments. 
• Be aware of credit repair companies that claim they can “clean” your credit report by removing unwanted information. Any correct information cannot be removed or changed.
• Once you’ve done the hard work to fix a bad credit score, keep up the momentum by diligently paying all bills on time, maintaining low balances on your credit cards, and only seeking out new credit when necessary. Having a budget and figuring out where your money is going (and where you might be able to save a little extra) can make a world of difference in the long term. 

How to start applying for car loans with a below average credit rating

If you are trying to secure a car loan, including used car financing, new car loans, or car loans for private sale, you can get started by applying for a car loan or used car loan with Rapid Loans via our online application which takes only 2 to 3 minutes to complete. 

Although our car loan assessment process is thorough and takes your circumstances into account, the loan application process is quick and easy. We use innovative technology to process your application and funnel it through to our team efficiently, allowing them to get in touch with you quickly. Our friendly loan consultants aim to ring you within two business hours to discuss your application – it takes only a few minutes and there are no judgments. We’re here to help! You’ll only need a few things to get started, like proof of income, some form of ID, and an idea of how much you’d like to apply for. 

Where to next?

Ultimately, Rapid Loans may be able to assist you with a loan to purchase a car, including used car loans and car loans for private sale, even if you have a less than perfect credit history.

We’re committed to helping our customers achieve their goals, including securing car loans and loans for used cars, which is why we pride ourselves on providing a straightforward car loan product that many Australians count on. No matter if you’re trying to get into your first car, upgrade to accommodate a growing family, or want to make the switch to a green car, we’ve got options tailored to everyone. 

We may ask you for pay slips, bank and credit card statements, evidence of benefit payment eligibility and any other relevant evidence of your financial situation when you apply for a car loan. Most of these things are now available through secure online portals, making the process seamless and pain-free. We’ve got plenty of information about how it works, giving you the transparency you need to get things all lined up before starting your application! 

As an intending borrower, we provide you with our Rapid Loans Credit Guide. If you’re interested in learning more, get in touch with our team. 

Apply online today or give one of our dedicated loan consultants a call at 1300 727 431. 

This article is intended as opinion only and not as a sole source of guidance. Responsible lending criteria applies. Australian Credit Licence Number 388847.