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Bad credit car loans can be referred to as loans or financial products that are designed especially for individuals that have an impaired credit history. If you are planning to opt for these loans, you can be assured that you will be offered loan of up to at least 150% of the value of the car. This holds true for car loans for bad credit rating in Melbourne and also across the whole of Australia. This percentage of the loan can cover up for the costs that you have to incur on warranty, cost of delivery, and cost of dealer delivery.
There are several instances when you will not be approved of a car loan with bad credit. Apart from having bad credit, there are other reasons that might deter you from availing these loans. These conditions are as follows -
Income is not enough - There is a certain income limit below which individuals will not be granted loan. This is a benchmark that implies a minimum cost of living. One of the main reasons why individuals are turned down for the loan is that they assume these applicants will not be able to repay the loan along with their other financial obligations on a monthly basis. As such, they require applicants for loans to belong to higher strata of income level. However, if you are in such a situation, you have other options too.
You can use any of your assets as security against the loan that you avail. This will put your asset at risk of confiscation/repossession.
You can also seek permission from your lender and request him if you could assign a guarantor. The benefit of a guarantor can be availed if you are a student and your parents can be the guarantor for your loan.
On the contrary, if you have a higher income and meet the requisite income level but it is seen that you have too many financial obligations, you are regarded as “financially overcommitted”, and you may be refused a bad credit car loan. So, you will have to have an income that meets the benchmark requisite and have a fairly balanced level of financial obligation. In this way, you know you are not overcommitted and you are not too stringent about your financial needs.
Non Australian resident - If you are not an Australian resident, dealing with you might prove to be risky. If you are regularly moving out of the country and returning at frequent intervals, you may not be able to repay the car loan as and when you are supposed to. As such, lenders refuse to work with you. So, this is one of the reasons why your application for bad credit car loans can be turned down. Under such circumstances, you will have to pay part of the purchase cost of the car you intend to buy.
Young applicants for loans - Unless you turn 18, your chances of availing a loan are greatly minimized. However, you can always seek assistance from your parents. But if you have already started working and your income level meets the benchmark requirements, you stand a good chance of getting your car loan approved.
It may be mentioned here that in Australia, you are given points in your credit history for being unwise with your finances. This is in sharp contrast to the system in United States, where you are given points for being intelligent and wise with your finances. So, lenders decide your credit rating accordingly in Australia. So, work out all possible measures that will help you to qualify for the loan.