Bad Credit History Car Loan Eligibility, plus 5 tips to prepare for finance application

Poor Credit Car Loan Eligibility

If you have a bad credit history, it is still possible for you to be approved for car finance! Even if you are not eligible right away, we can coach you until you are! Unicorn Auto specialise in second chance finance and we have over 30 lenders on our panel. So, the good news is that if anyone can help you get approved for car finance, we can!

What issues can prevent your eligibility for car finance?

Even though we are bad credit specialists, there are still factors that can prevent your immediate eligibility.

The below faults are the most common occurrences that may affect your car finance application:

  • More than 4 defaults
  • A current car loan debt
  • Outstanding debt to Money 3
  • Part 9 Bankruptcy

If you are currently in any of these situations, you may not eligible for a car loan right now, but in as little as three months you could be eligible to apply.

How can you fix common bad credit issues?

For defaults, you just need to get your defaults and debts into payment plans. If you can make paying off the financial defaults your first priority, and then Telco defaults your second priority, and then get any more than 4 defaults paid in full. This will show lenders you are trying to fix your defaults, so they can see you would be reliable for a new loan.

For car loan debt, you need to keep on top of getting your car loan debt into a payment plan and be consistently making payments over a three-month period. This will show the lenders you are trying to pay off your loans, so they can see you would be reliable for a new loan.

For Money 3 debt, you need to get your outstanding Money 3 loans into payment plans and pay them off. This will show the lenders you would be reliable for a new loan.

For Part 9 bankruptcy, you need to wait until you are at least halfway through your Part 9 bankruptcy and ensure you have perfect repayment history.

Bad Credit Car Loan Eligibility

If you have sorted out your current defaults, good work! What you then need to be eligible you need to receive a Pension or have been at your job 12 weeks or more earning $800 or more per fortnight.

How to Apply for a Bad Credit Car Loan

If you think you are eligible, apply now, it is really easy. Just type in all your basic info and submit it.

Then it will take you to the second page where it will ask you to upload:

  1. Privacy form (to give us permission to submit your app)
  2. Last 3 months of bank statements
  3. Centrelink Income Statement (If on Centrelink)
  4. Last 2 payslips (If working)

Before applying, have a read of our tips to help you get approved for car finance!

5 tips and solutions to prepare for a car finance application.

1. Minimise ATM cash withdrawals and excessive gambling:

As mentioned above, stop withdrawing cash for savings straight away. Lenders can now easily calculate the percentage of income being withdrawn at ATMs and lenders often view cash withdrawals as gambling, even if you are just putting it aside as savings!

How else can you put money aside to save?

Rather than withdrawing cash to budget or save, open a separate bank account and limit access, e.g. Do not activate a Debit card for the account. Online banking and immediate transfers between accounts makes it simple to create multiple accounts for a variety of uses. As an example, have a ‘rainy day fund’ for savings or an ‘everyday’ account for general living expenses. This shows lenders your capacity to manage your everyday expenses, savings and existing commitments, whilst also accounting for all income in your bank accounts.

2. Prevent dishonours on bank statements and financial commitments

When applying for additional finance, it is important to show good repayment history with lenders on existing financial commitments. Consistent dishonours on your bank statements shows lenders an inability to manage your funds effectively.

But what if dishonours are out of your control?

Sometimes these dishonours are out of your control and most lenders are aware of this; so, if you find yourself in a situation where you could miss a payment, it is always best to contact the lender prior to the drawing date and attempt to organise a resolution. Credit assessors would prefer to see clients organise ‘make up’ payments rather than dishonour and avoid the problem, burying their heads in the sand!

3. Avoid using payday loans for everyday expenses

Payday loans are a quick and easy solution for finance; however, they end up hurting borrowers with high interest and large ongoing repayments. Payday loans may be a viable option for unexpected emergencies or unforeseen financial situations, but they will have an adverse effect on your credit rating and chances at finance for the future.

But what if you don’t have enough money available for my commitments?

If you are struggling financially with your ongoing commitments, look into the possibility of obtaining a consolidation loan to manage your repayments and get on top of your financial situation.

Lenders will look unfavourably at the use of payday loans to facilitate general living expenses and could mean the difference between declining and approving your application.

4. Avoid high volume of bank transfers

Some borrowers prefer to transfer funds from different accounts on a daily basis for existing repayments and general living expenses. Not only does this behaviour run the risk of dishonouring on financial commitments, but also makes it difficult for lenders to track your bank statement activity. The easier it is for lenders to evaluate the inflow and outflow of income and expenses, the faster they can reach an assessment decision.

How should you manage your bank accounts?

Try and keep your bank statement activity as clear and concise as possible so lenders can reach a decision without any degree of ambiguity. Simply put, try keep your money in the one account as much as possible.

5. If you are uncertain about your chances of finance, ask for advice!

If you have any questions about your borrowing capacity or how your application might look to a potential lender, it is always best to consult a broker! Simply put in your application online and we will pre access it before sending it to the lenders.

Our team of Brokers at Unicorn Auto will help to find you a potential lender that will assist with your funding requirements or give you advice that will improve your financial application for the future. We will even give you free financial coaching with regular reminders emailed to you to help keep you on track!

Get Car Finance Today with Unicorn Auto

If you are needing car finance, simply fill in our Finance Application form online today! Or if you have any questions, contact us today.

Apply Now View Cars Contact Us

Apply for car finance today