Owning a car can open doors to new opportunities. Whether you depend on your vehicle to run the children to sports practice and commute to work, or to forge unforgettable memories on the open road, your car is a symbol of personal independence and freedom. But the necessity of buying a car can be a daunting and stressful task if you have a poor credit score.
Let’s look at everything you need to know about applying for a car loan with bad credit.
Can I get a car loan with bad credit?
Don’t lose hope. There’s a misconception that once your credit history has defaulted, getting a personal or 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.
We’ll take your whole situation into account when assessing your application – not just your credit score. We offer secured online car loans from $5,000 to $40,000 and have made sure the entire application process is simple, fast and secure.
Even if you have a credit score at the lower end, you may not automatically be ruled out for a loan, including a used car loan or private sale car loan. If your score isn’t great, it would help to gather as much supporting information as you can to explain your previous financial history.
Here, we’ve compiled some tips to help get you on the road, even if you have bad credit.
How do I improve my credit score?
If you have a bad 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 when talking about bad credit car loans, applicants 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
Try to avoid applying for multiple loans at the same time. Whenever a hard enquiry is made, your credit score can be affected negatively. This is because 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.
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. However, if you’re struggling with payments, there is a solution!
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.
Consider lowering your lending amount
As applicants with a bad 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!
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 help your approval for a car loan with bad credit
It’s worth keeping in mind that your credit score is not fixed. You can help your approval for a bad credit 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 up 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.
- 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.
How to start applying for car loans with a bad credit rating
If you are trying to secure a car loan, including used car financing, bad credit 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 financial situation – it takes only a few minutes and there are no judgments. We’re here to help!
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 bad credit history.
We understand that sometimes bad things can happen, which is why we’ll do our best to assist you even if your credit score isn’t the best. 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 an accessible car loan product that many Australians count on.
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.
Apply online today or give one of our dedicated loan consultants a call at 1300 727 431.