Finding a fair deal on car finance with bad credit isn’t like searching for a needle in a field full of haystacks. There is a logical order to things sometimes. Finding good bad credit car loans might take a bit longer but it’s entirely possible – and worth it. Just keep in mind that bad credit car loans will usually attract higher interest rates than “regular” or mainstream car loans. If you follow these steps, you could find a deal that will eventually reduce your debts in the long term.
Currently, you’re likely only about two or three steps away from something that can search the internet at any given time. Having that in mind, you can research bad credit car loan options using your computer, phone or tablet. Find as many brokers and financiers as possible and see what they offer. See which sites offer no-obligation quotes to get an idea of what you’ll pay.
2. Ignore the “zero percent” and “one percent” dealer finance offers
You might be tempted to take the “zero percent” finance or “low rate” finance offers that car dealers often peddle. Don’t fall for them! These “deals” have many hidden traps. You might not be able to negotiate the price and end up paying a lot more than you bargained for. If you want to get back into good credit, don’t take the “easy way out” – it often isn’t.
3. Check your credit history
This step is crucial – check your credit history so you are better prepared when you eventually settle on a broker. Your credit history is the first aspect your chosen financier will assess when figuring out your eligibility for a loan. Your credit history might have errors in it. It’s your responsibility to fix them if they occur. This could improve your credit standing.
4. Set a reasonable budget – and stick to it
Once you have a couple of brokers or lenders that you’re comfortable with, it’s time to go car shopping. Keep in mind that lenders see people with bad credit as higher risks. It’s worth your while to budget conservatively. If possible, you should provide rough estimates to your lender, showing you can comfortably take on a large debt such as a car loan.
5. Do your homework round 2: researching your lender
So you’ve picked a lender or two and you’re ready to apply. Before you do, check out your lender a bit more closely. Do they have positive user reviews on sites like WOMO.com.au? Have they been around in the industry for a reasonable amount of time? Do they have a current Australian Credit Licence? You can check using the ASIC website. You can never be too careful!