Some tips on how to get the best deal on a poor credit rating…
A less than perfect credit rating doesn’t mean you won’t be able to get a new set of wheels.
There are some simple things you can do to help you get the best possible loan and all with the least amount of fuss.
Be upfront about your rating
Before you go shopping for a new vehicle, contact different finance providers and explain your situation.
Gauge their response, if they seem positive about progressing further, or not, then this might save you a whole lot of trouble when it comes to the crunch.
You never know, you might be able to have the assistance of a finance company right through the whole car buying process.
Don’t apply for credit with multiple lenders
It might seem that the more applications you submit the better your chances, but this can actually work to further negatively impact your credit rating.
Try for a longer loan
Yes, you will end up paying more, however the lower monthly repayment costs might just make the difference between getting finance and not.
The finance provider will look at your current financial situation, including income and expenses, and decide exactly how much they feel you can comfortably repay.
Bill Tsouvalas, founder and managing director at Bad Credit Car Loans says extending the term of your loan can take a lot of pressure off.
“A lot of people initially opt for three year loans, especially when they are trying to improve their credit,”
“But a longer loan period can help you maintain your cashflow and enable you to show over a period of time that you aren’t actually a bad credit risk.”
Information is your best friend
Finance providers looking at potential borrowers who have poor or bad credit ratings are going to be even more thorough when it comes to checking out your financial situation and background.
Be sure to have documents like payslips, tax returns, bank statements and any other relevant financial documentation that can give the assessors the best picture of where you stand.
Business owners with poor credit
The documentation and information strategy is especially important for potential borrowers who are self-employed.
Be sure to provide recent invoices, business tax returns and copies of any contracts that the business holds with external clients.
Don’t borrow more than you need
The irony is that you need to borrow money to improve your credit score, so, take small steps first.
You might want that brand-new sports car, but maybe a small car is a more achievable goal? Or, try to find a demonstrator model – these can be thousands of dollars less than a regular new car.
Do you really need those optional extras? Keep it simple and as low-priced as possible and this will help you get back in the credit game.
Come to the table with a deposit
A decent deposit will help you a long way towards the finance you need on a new set of wheels.
That means, save! Put some money away each week over a couple of months and before you know it you have some equity to bring straight into the equation.
Having a deposit (and savings record) helps show the lender that you have the ability to cover repayments.
If it’s too good to be true…
We’ve all seen the signs promising ‘everyone approved’, but this could mean you’re signing up for extremely high interest rates and possibly large upfront commissions and fees.
A loan like this could possibly set you back again and further damage your credit rating.
Shop around and try and find a finance provider that wants to work with you to get the best possible outcome for both parties.
Get a guarantor
Having a close friend or family member act as guarantor may make you a more attractive prospect to lenders.