Need a second chance car loan? We can help
Don’t let bad credit hold you back. Savvy helps you drive away your own car sooner
Bad credit is OK
Do you have a bad credit rating? Have you been rejected for car loans? You deserve a second chance! At Savvy, our experienced bad credit car loan consultants can help you achieve your dream of owning a new or second hand car, even if you have bad credit.
Don’t despair! Our bad credit car loan consultants are experts at getting those tricky deals approved. We can also advise you on steps to take to improve your credit rating and have you on your way to owning your car in no time.
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So if you think you deserve a second chance, Savvy can help. Although a Bad Credit Car Loan solution is secured by the vehicle, the interest rates are usually higher due to the added risk, however we will help you get the best car loan deal with repayments which you can afford.
That’s our promise! If you have been rejected by traditional lenders, contact one of our experienced consultants and we will find a car loan to suit your needs from one of our reputable lenders.
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Bad credit car loans explained
Looking for financing for a new car when you’re struggling with your credit score can seem like a challenge to overcome. However, it may not be as difficult as you initially think. Bad credit car loans can be a great way to help this process along if your credit rating isn’t high enough to be approved for a traditional car loan. Read more about bad credit car loans, how they work and how to compare them in this comprehensive guide.
What are bad credit car loans and how do they work?
Bad credit car loans are a product designed to help customers finance the purchase of their new cars, despite their credit history deeming them to be more of a risk. The following are some of the most likely to impact heavily upon your score and, as a result, make you a more suitable candidate to take out a second chance car loan:
- Defaulting on credit: credit defaults appear on your credit rating when you have an outstanding debt that you haven’t paid. This could be anything from a bill to a loan repayment. When a debt instalment is missed or is paid past due, your loan or other outstanding payment falls into arrears and it can be difficult to obtain financing. Bad credit car loans are still available to borrowers with unpaid defaults.
- Agreeing a Part IX debt agreement: this agreement can take place when you become unable to complete the payment of your debt to creditor/s. Whilst this agreement avoids you being declared bankrupt, it does heavily restrict your finances and your capacity to obtain external financing for a vehicle, for example.
- Being declared bankrupt: being classed as bankrupt cuts off a wide variety of channels when it comes to spending or obtaining financing. While this remains the case during your term of bankruptcy, you aren’t placed under these restrictions as a former bankrupt. Because of this, bad credit car loans are amongst the few options available if you’re looking to purchase a new vehicle.
Aside from these, though, the financing itself functions in the same way. Borrowers are granted a set amount of money by their lender for the purpose of purchasing a car, which will be paid back over a set period with added interest and extra fees.
However, bad credit car loans aren’t solely open to customers with poor credit ratings. They can also be a useful option for other high-risk customers such as non-permanent residents and sole traders, both of whom can find applying for car financing difficult due to their personal circumstances.
What factors can influence my bad credit car loan application?
Lenders will consider your application closely and take a variety of factors into account when making their ultimate decision on whether to approve it or not. These will all combine to answer the question in your lender’s mind “Can they repay this loan?” These are the most important things that lenders will consider with your application.
Your credit rating
This is the big one for lenders to assess when processing your application. If you’re applying for a bad credit car loan, it’s reasonable to assume that you might’ve had a patchy history with your finances in the past. This is the first indicator to any lender about how good or bad you are at repaying debts, but it’s not the be-all and end-all.
The size of your loan
Not all cars can be feasibly financed if you have a bad credit score. A lender will want to see a realistic loan amount in the applications that they consider: the lower the amount, the lower the risk. For example, no bad credit car lenders will accept a $75,000 loan application for a bad credit customer, as they likely won’t be able to service the loan with interest on top of principal repayments.
Your income
This also plays a significant role in determining how suited you are to repaying the loan. Lenders will look for applicants whose income will comfortably cover the loan’s repayment requirements. They won’t approve a loan for a customer whose monthly income is eaten away substantially by their car loan repayments, for instance.
Your recent spending habits
Your cost-of-living expenses and how much of a burden they place on you will inform your lender’s decision also. As mentioned previously, they’ll want to see that paying off your loan won’t make your life overall significantly more difficult. Also, if you can prove yourself to be relatively responsible with your money, it can go a long way towards helping your chances of approval.
How can you get approved with bad credit?
Follow these steps to increase your chances of bad credit car loan approval
Review your statement and credit history
The first step is reviewing your bank or financial statements and your credit history. Your credit history is how a lender finds your suitability for a car loan.
If it has errors, it may end up costing you even more in the future.
Use your existing records
Using your statements and credit history, you can state your case that you will pay your lender back. Lenders hate risks, and try to offset that risk by rejecting risky applicants.
By reducing your risk profile, you are better positioned for approval.
Don’t cook your own books.
Just like life, honesty is the best policy. Don’t try to fudge the numbers or hide your true financial position.
We’re here to help, and your consultant can’t help you with incorrect information. Lying will come back to haunt you.
Pay outstanding debts
Paying down other debts such as credit card debt or personal loans will go a long way to prove you are taking steps to become financially responsible.
Debt consolidation may also be a good option as it can simplify your repayments.
Seek help
If financial statements and credit histories sound a bit like jargon, you aren’t alone.
Our professional consultants are here to help you through the process and explain any terms or concepts that you may not understand.
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Some of your bad credit car loan questions answered
Read through our knowledge base to find answers to all your common bad credit car loan questions
Your guide to bad credit car loans
Guides to help you gain the best chance at bad credit car loan approval
Use a car loan calculator to budget
Presenting a solid budget to a lender increases your chances of approval. You must know: How much can you afford to in repayments each week, fortnight or month? Have you figured out registration, maintenance, insurance and fuel? How much have you saved already, and what is the gap between what you’ll need for a loan and what you already have? You can set a budget by using a car loan calculator, which gives you an estimate of repayments.
Budget for a car within your means
Before searching for any type of car, you must consider your financial situation. Though we’d all love a supercar, that is way out of reach for most people. You must make sacrifices if you want to ensure approval for a bad credit car loan. Look around online and in trade papers for cars within a modest price range. If you are approved for finance, ask for pre-approval so you stick to that budget.
How bad credit car loans may correct your credit?
Bad Credit Car Loans can be an instrument to repair your credit. Demonstrating you are responsible with your finances, your credit history will improve over time. It may take years – as much as seven years – but paying off a loan on time and in full will show other lenders you are a lower risk. In some cases, your risk profile may go down enough that you can refinance your car loan at a more favourable rate.
No credit check car loans - Don’t take the bait
If you feel frustrated due to car loan rejections from banks or lenders, it’s tempting to opt for a no credit check car loan. This can often lead you down a garden path, as no credit check lenders assume you are the highest possible risk, and only lend at the highest possible interest rate, sometimes up to and over 30%! You may also have to come up with a big deposit and pay off the loan over a longer term, costing you much more.
