What are the requirements to apply for a bad credit car loan?
Just like any other car loan applicant, you will need to answer the following questions to the satisfaction of the lender when you apply for bad credit car finance:
- Who are you?
- What do you need the money for?
- How will you pay back the loan?
What documents are you required to provide?
Loan application paperwork is required to protect you from unethical lending practices (lending you more than you can repay) and to avoid fraud. This is a legal obligation for the lender.
There are three types of documents you’ll need to provide:
Details about the vehicle
- VIN (vehicle identification number) and registration number
- Purchase price
- Proof of comprehensive car insurance
Who can CarLoans.com.au assist with auto loans for people with negative or poor credit history?
People with defaults
Defaults on your credit file can prevent you from getting financing from many of the larger institutions, and they can be tough to overcome because they linger on your credit file for five years. However, we deal with lenders who are willing and able to work with you. Our consultants are experts in the product market and can find you the best value loan for your needs.
Borrowers with a limited credit history
To a lender, having no credit history is roughly equivalent to having a bad credit history. It means that lenders have no way of knowing how trustworthy you are as a borrower. However, our car finance brokers can find you a loan even if you have never borrowed before, provided you can show us that your income is enough to handle your repayments.
People who receive Centrelink benefits
Borrowers whose Centrelink assistance accounts for a large percentage of their income have a harder time being accepted for vehicle loans. Our lenders are happy to deal with customers who have alternative sources of income, such as Centrelink, particularly those who receive half or more of their income from benefit payments.
While traditional vehicle loan application criteria often requires you to provide employment contracts and payslips, our car loan brokers can help self-employed people looking for car finance who may not have up-to-date records explore their low-doc lending choices.
What to consider when applying for a bad credit car loan
Interest rates are usually higher
If you have a bad credit rating, traditional lenders may either deny your loan request or offer you a loan with a very high interest rate. One of our lenders that specialises in bad credit car finance, on the other hand, may be able to provide you with a cheaper loan and speedier approval times.
Fees for bad credit car loans are often higher. On bad credit car loans in Australia, some lenders impose a monthly account fee or administration fee. Many lenders will also charge an establishment fee to arrange your loan, which can be substantial. Finally, if you repay your loan before the agreed-upon loan term date, many lenders will charge you a fee. Fees can really add up and increase the price of your loan, so it’s important to consider these carefully before you take out a loan.
Smaller loan amounts
The amount of money you can borrow for a car loan is determined by your income, monthly expenses, and credit history. If you have a poor credit score, you won’t be able to finance all cars. In the applications they review, a lender will want to see a reasonable loan amount: the smaller the amount, the lower the risk.
Higher deposits can help application chances
A deposit is not required for a car loan, but it may be beneficial. Having a deposit may gain you access to more competitive interest rates, depending on the lender.
How to apply
Apply online or over the phone and we’ll take care of the rest
CarLoans.com.au has simplified the process of obtaining a low-interest auto loan. Our four-step approach saves you time and gets you in the driver’s seat more quickly.