Applying for a Car Loan when you have a bad credit history (or no credit history) can be a daunting thought. But what if you could reduce your chances of being knocked back? While no ‘guaranteed approval’ loans are available in Australia, some lenders will give you a second chance at finance.
At Finance One, we are proud to offer lending solutions for Aussies worried about their low credit score getting in the way of being approved for a loan. Keep reading to find out more about how you may be able to be approved for a loan with bad credit.
How do bad credit loans work?
Bad credit loans are Personal Loans offered by specialist lenders (such as Finance One). Just like any other regular loan, bad credit loans are subject to eligibility and lending criteria; specialist lenders simply have more flexibility to assess borrowers’ situations that don’t fit the cookie-cutter mould of the big banks and traditional lenders in Australia. **
Who can provide motorbike finance?
Applying for motorbike finance is very similar to getting a Vehicle Loan for a car. And just like Car Loans, motorbike finance is often offered by motorbike dealers, banks and other financial institutions.
What’s the maximum bad credit loan amount available?
Depending on the purpose of your loan and whether you opt for a secured loan or unsecured loan, the loan amount for bad credit loans may range anywhere from $5,000 right up to $75,000 (or even higher, depending on the lender). * However, it’s important to remember that your available loan amount will ultimately come down to the results of your application and your financial circumstances.
Loan terms
The term of your loan refers to how long you have to repay the loan. We offer finance terms between three and seven years for Motorbike Loans. This means you can choose the loan term that best suits your budget and financial situation.
Interest rates
Speaking of interest rates, many borrowers wonder what interest rate they’ll pay with a bad credit Personal Loan. Understandably, the risk to a lender is higher when they’re lending money to someone with a poor credit history rather than a borrower with a glowing credit rating. To help mitigate some of this risk, typically, interest rates on loans for applicants with a bad credit score are higher than those offered to a borrower with a good credit score.
So, can you get approved for a Personal Loan with bad credit?
Absolutely! While traditional lenders such as banks and credit unions may knock you back if you have a bad credit history (or no credit history), lenders like Finance One understand that there’s more to your story than just your credit history. Taking a personalised approach, Finance One is able to work with people who might have less than perfect credit history to try to work out a finance solution to meet their needs.
Is there such a thing as a guaranteed bad credit loan?
Under Australia’s National Consumer Credit Protection Act laws, credit providers aren’t allowed to provide guaranteed approvals to consumer loan applicants. Credit providers need to comply with responsible lending obligations to ensure that a loan is suitable for the borrower and that the borrower can repay it without suffering substantial hardship.
But don’t feel disheartened! This is a good thing. Imagine being guaranteed finance only to realise down the track that you can’t actually afford to make your repayments, and then defaulting on your loan; not only would this potentially make your credit rating much worse, but if the loan had collateral (such as a car or piece of business equipment) against it, this potentially exposes you to the risk of having your asset repossessed by the lender.
Tips to improve your chances for a loan with a bad credit rating
1. Demonstrate that you can afford to repay the loan
2. Have consistent income
While it might be hard to always get paid the same amount each week, fortnight or month (we’re thinking of you, self-employed people), having consistent income demonstrates to lenders that you have a consistent income source to be able to make your loan repayments.
3. Work on improving your credit score
This tip may seem obvious, but understanding what your credit score is and taking accountability for the information on your credit file puts the power back in your hands to improve your score over time. Credit reporting bureaus in Australia are required to provide you with a free copy of your credit report once every three months. Accessing a copy of your report may help you identify what behaviours or trends in the past have led to your lower credit score and will allow you to dispute any incorrect information or remove aged defaults, or square up unpaid defaults which could be holding you back!
4. Pay down your existing debts
Before you submit a bad credit loan application, consider if you can afford to spend some time paying down your outstanding debts, such as another loan or credit card. Not only will this demonstrate your creditworthiness to access bad credit finance, but paying down your outstanding debt may increase your borrowing capacity to obtain credit in the future.
5. Opt for a secured loan
If you’re looking to borrow money for a vehicle, boat, motorbike, piece of business equipment or other asset, you may be able to use a secured loan. Secured loans provide the lender with more – well – security in the event that you default and aren’t able to repay the loan. This could potentially work in your favour and give you more of a shot at having a bad credit car loan approved.
Working with Finance One to access bad credit Personal Loans
At Finance One, we offer specialised lending to bad credit borrowers looking to access a Personal Loan or bad credit Car Loan. Our judgement-free, compassionate and personalised approach to finance means that you don’t need to have a perfect credit score to access finance but may find the perfect lender for you.
Whether you need money to perform a debt consolidation to work towards a stronger financial future, pay for car repairs, medical expenses or business costs, talk with the friendly team at Finance One.
*Loans between $50,000 – $75,000 must be asset backed.
**Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.
