How To Get A Bad Credit Car Loan

Ever heard the saying you are only as good as your last bat? Unfortunately, the big banks and credit lenders alike in the finance industry have the same mentality when it comes to consumers. In some fashion, a consumer looking for a bad credit car loan is like an athlete looking to be drafted onto a sports team. You are only as good as your last bat. You may have been an incredible player for much of your career, but if your last season was less than stellar, it becomes quite difficult to join a team. Similarly, in finance, a consumer may have had a clean credit history however as soon as your credit report receives a bad mark or two, good credit lenders such as the big banks don’t want to know you. However bad credit isn’t the end of the line, in fact its far from it, below is some invaluable advice that if followed will not only improve your credit position but also your chances for getting approved.

Payday Lenders

A payday loan is a short-term cash loan of $2000.00 or less. Unfortunately, one of the most common and harmful things that our customers do that damage their chances of successfully obtaining a car loan with bad credit is applying for and/or taking out a payday loan out. It is a common misconception that pay day loans are helping your credit rating and you may be asking yourself why are they so harmful? All finance companies do not look upon the favourably because they are of the mindset that you should be able to afford all your commitments on your current income. They aren’t just damaging to bad credit customers as well; payday loans also have a negative impact for customers of good credit to as all good credit finance companies such as your big banks have a much higher chance of saying no with just a payday loan enquiry on your credit. So, what can you do about it? Answer is simple, stay right away from them if possible. What do you do if you already have one? Try and make sure that at most you have no more than 2 current payday loans and pay them off as fast as you possibly can.

Avoid Multiple Applications

A common train of thought that some consumers have is that having multiple applications up with different finance lenders/brokers will give them a better chance at an approval for the loan they want, however this isn’t the case. Having multiple applications on the go with different places increases the activity on your credit report, which also decreases your credit score and thus diminishes the chances you will get an approval for you bad credit car loan.

Employment history and stability

Risk assessment is the most important thing to a lender when assessing an application. It is within a lenders best interest to not lend funds to people who cannot make their repayments. Having a history of consistent employment and income will make the lender feel more confident in financing your car loan. A standard requirement is that you must be employed for a minimum of 3 months with income being deposited into your bank account. Another standard requirement that lenders conduct is a residential history check. Having a good rental history/mortgage payment history is also highly beneficial to the likelihood of your application being approved similarly to showing consistent employment and income.

Banking Conduct

A standard requirement from almost all bad credit lenders are 90 days’ worth of bank statement transaction history from all accounts held under your name. The reason they ask for this it see and confirm that there is income going into your account, of which they then average your income out over the 90 days for serviceability purposes. Bad credit lenders also use the bank statements to see any outstanding liabilities as well. General banking conduct is also a factor, so the less dishonours and overdrawns, the better as the lender would like to see you, the person they lend money, demonstrate the ability to pay their current commitments consistently on time.

Do you tick these boxes to get a car loan with past bad credit?

1. No more than 2 pay day loans, current or in the last 3 months.
2. Employed at your current job for more than 3 months.
3. Good residential history; mortgage, rent or board has been on time for the last 6 months.
4. No more than 6 minimal overdrawns on your bank account over the last 3 months, the less the better.
5. No dishonours on you bank account over the last 3 months.
6. Any current loans you may have has had a perfect payment history for the last 6 months.

“Knowledge is Power” – Sir Francis Bacon

Now that you have the knowledge on what the do’s and don’ts for a car loan with bad credit, you have the power to go and apply for one with necessary tools and confidence to get approved. But who do you apply with? Your best bet would be a broker who is a bad credit specialist, such as the team at Auto Link Finance with a plethora experience in the industry. Our customers are not numbers and as such are not treated that way. Auto Link finance aims to get our customer the best possible loan package that can be obtained to best suit their situation. We are the experts when it comes to bad credit finance so give us a call on 03 9368 3298 or apply here to start a free credit assessment now.