With more than 25 years’ experience handling bad credit rating car loans, truck loans and caravan loans, our consultants have seen every scenario.
It is very important that you actually understand what your credit file rating actually means. Although it's not the only thing a prospective financier looks at, it is a picture of you and your likelihood to pay.
There are two parts to this. Whether you have the ability to pay and if you will pay. If we can convince a financier that can afford it and you are likely to pay, you are going to get your loan approved.
Firstly we must look at whether you can afford to pay. No lender can lend you money if it can't be shown you can afford it. ASIC who oversee loans from lenders and/or organised by finance brokers have very harsh penalties for those who lend money to someone who cannot afford it.
From a financiers point of view, we'll answer these two questions.
Can you afford the loan repayments?
- The law requires that certain expenses be allowed as minimums for every borrower. They vary slightly from lender to lender, but as a guide. A single person $1,200 per month, A couple $2,000 per month, A dependent child $350 per month. If you can not meet these minimums which exclude rent or board financiers can not approve your loan.
- Pay day lenders. These are seen as an inability to live from week to week. Most lenders will allow one. A couple of lenders will allow 2. If you have pay day loans, you must be paying them on time, every time. Even if you are paying on time, some lender just will not lend you money.
- Not disclosing loans, credit card commitments or dependents. Lenders take a very dim view of this. You can expect your loan application to be rejected.
Are you likely to pay?
Once we have proved you can afford to pay. The second question is will you pay. There are many indications of your likelihood to pay.
First things first. Financiers for people with bad credit look at your character, not how much you earn. Earning a high income does not convince a financier that you will pay. They look at;
- Do you actually have defaults or are you just a slow payer? This includes having your credit cards cancelled but you are still paying them. You need to ensure when applying for any loan that you disclose the outstanding amount owed. Financiers in many cases do not do credit reference checks.
- How many defaults do you have? The more you have the less likely you will pay.
- If you have your defaults under arrangement and you are paying, this tells a financier that you had problems, but you are accepting your responsibilities. This is very positive for a financier.
- Your defaults are very old. “Time heals a lot of wounds” for some financiers Provided your defaults are no to great, some financiers will look past them.
- Proof of good credit history after your defaults. You still won't get approved by a bank, but many finance companies will look past previous problems with proof of a good loan payment history.
- Joint application – Applicant # 1 long term full time – Applicant # 2 Family benefits
- 3 months Renting
- 5 Dependents
- Over 50% reliant on Centrelink to show they could afford
- $18K listed P/L default listed within 12mths – under arrangement
- Current agreements and multiple bankruptcies ineligible.
- Good bank account conduct essential.
- Reason for bankruptcy should be supplied.
- Defaults after bankruptcy will not be considered.
- Discharged less than 12 months Maximum lend of $15,000.
- Must be over 25 years of age.
- Renters and home owners only. Must be in residence for a minimum of 12 months.
- In current employment for a minimum of 12 months.
- Unpaid finance defaults incurred within the last 12 months need to be small or be under arrangement with a good explanation why the default occurred.
- Unpaid finance defaults more than 12 months should include an explanation of the nature of default and preferably to be under arrangement. Unpaid finance defaults more than $5,000 MUST have a deposit and evidence of good financial conduct.
- Same rules as defaults
- Total amount outstanding for all telco/utility defaults must be less than $5,000.
The preparation of a bad credit car loan application is far more demanding than a general car loan. For this reason our most experienced Partner oversees every bad credit application.
The financiers want to know everything about you. They are going to ask you for more information than a main stream financier or bank. There is good news though, the bad credit rating car loan lenders will in many cases approve your bad credit rating car loan application.
A few words of caution, these lenders are going to charge you more than a bank, therefore we strongly recommend that you borrow at a lower level, as you do not want to overcommit yourself. If you default on this loan, you won’t get another for a long time.
Approved $14K over 48 mths
Ex Bankrupt & Part IX: