Here’s what you should know about getting car loans with bad credit.
If you have a bad credit score, getting approved for a car loan can be slightly more difficult, but it’s not impossible. You still have a few options available to help you get the car you want, even with a bad credit score.
Pocket Cash can help you find a lender who could approve you for a car loan with bad credit. People deserve second chances and we know your credit score isn’t the only defying factor. We’ll aim to find a lender who can look at more than just your past relationship with money.
Here’s what you should know about bad credit car loans as opposed to regular car loans:
Know that if you are concerned about debt or bad credit, you can speak to someone. If you find that you’re in a stressful financial situation and are unable to handle debt, talking to a financial advisor or free financial counsellor could be helpful.
Remember, there is always someone there to help and talk to when you find yourself financially or emotionally distressed.
Buying a car is a significant purchase that requires a lot of consideration. When you start the process of looking at different cars to find the right one that fits your goals, budget, and needs, the first thing you’re going to do is compare. You’re likely going to compare different cars by their make, model and features. This is exactly how you should treat any type of loan.
A car loan comparison is essential to finding the one that you can comfortably manage and fit into your budget. Just like comparing a car’s make and model, you should compare different loans’ interest rates and car loan repayment terms. We’ll aim to help you find the right lender, even with bad credit. You want to compare the interest rate and loan term. However, one of the most important factors of any type of loan is how you can manage to make repayments. Let’s get into the details of how bad credit car loans work.
The interest rate that we charge on your loan is a percentage that will be a part of your repayments. Think of this percentage as a small cost of borrowing the money. You can get a loan on a fixed interest rate, or a variable interest rate. A fixed interest rate is simply a rate that won’t change over the entirety of your loan term.
Many people may choose this option as a form of security because they know this rate can’t increase, and more importantly, they know exactly how much will be deducted with every repayment. A variable interest rate, on the other hand, is a rate that can change. You may want to also choose variable interest on your loan as it means your rate could decrease at some point of your loan term.
The loan term is the amount of time taken to repay the loan in full. You can choose your loan term accordingly with your budget and plan. We’ll work to help you find a lender that can offer you a loan term that works for you. If you choose a shorter loan term, you might find that it reduces the amount of interest paid overall. While that option does get you out of debt quicker, keep in mind that your repayments will be much higher. Managing a certain repayment is vital to your budget because missed payments could do affect your credit score and credit report. Additionally, if you choose a secured loan with high repayments, missing them could mean your collateral would be repossessed.
On the other hand, if you choose a longer loan term, you will obviously have lower repayments. Although lower repayments may seem appealing, you must also remember that longer loan terms could mean you could pay more interest. Whichever you choose, make sure your loan term suits your income, budget, and financial plans.
It’s not impossible to take out a car loan with bad credit. However, we can give you a few tips on how to improve your bad credit if that’s your current goal.
Your credit score is a rating that shows a lender how risky you would be to lend to. Here’s a chart of credit scores in Australia along with what they mean for you:
Although can’t improve your credit score overnight, there are many things you can do to improve it. Here’s how you can maintain or improve your credit score over time:
Check out this Pocket Cash guide for how to get a loan with bad credit!