Bad credit car finance is a great option for getting the car you need and repairing your credit.
This guide answers all those questions you might have about bad credit car loans, so you can find the best deal that suits you.
1. What you need to ask
First off, how much will you be borrowing? Keep in mind that lenders generally won’t let people with bad credit borrow for cars that are way out of their price range.
It also helps if you have a small deposit saved up (although this isn’t strictly necessary.)
Make sure you find a range of lenders and get quotes from each of them
You should set an amount that you can repay comfortably, plus factoring in any other necessities like insurance, fuel and maintenance. Use an online calculator to help you.
Secondly, what is the interest rate they are offering? These may vary from broker to broker, lender to lender.
Make sure you find a range of lenders and get quotes from each of them. You might be surprised at what you might find.
Then, ask how long the loan term is. Generally, you pay off loans within a set time.
Car loans have terms of 3 to 5 years in most cases. Lenders that offer lengthy terms like 10 years might push you further into debt as you’ll be paying off a debt that’s more than the worth of your vehicle.
You must ask what the repayment schedule is, so you know exactly when your lender expects you to make repayments. Also, ask if you can make extra repayments to pay off the debt quicker.
A crucial question is what the fees and charges are with the loan. Some lenders advertise loans as “comparison rates,” which include most fees and charges in the figure lenders provide. However, some fees like a statement fee may not be included.
It’s also a great idea to get a copy of your credit history before applying, so you can correct any mistakes that might be on it.
2. Research you can do yourself
How do you decide on a car loan lender or broker? Your easiest and best way is to look online.
Read up on user reviews, check if they have an established record of accomplishment and verify they have a current Australian Credit Licence. This research all helps you avoid frauds and dodgy dealers.
3. Is a bad credit car loan the right choice for me?
If you don’t have great credit and require a significant amount of money to purchase a car, a product like this may be a viable option. The car you intend to buy and your current financial situation affect it as well. There other alternatives such as using a credit card or small cash loan, but you should weigh up what’s right for you.
Remember, gaining approval for a bad credit loan and paying it off responsibly reflects well on your credit history. You open yourself up to better rates and more competitive loan products in the future.
Article credit: Bad Credit Car Loans