Another NO. In desperate need of new wheels, you put the phone down in despair. Will you manage to obtain vehicle finance again? Or will the past haunt you forever?
Well, it’s by no means a great situation to be in, but all is not lost.
Your history follows you
If you have, or had an account anywhere, then you are in the credit system. Even for regular utility bills such as electricity, gas or water, a trail of your financial conduct is kept on record and rated continuously. The system assigns a live credit score to your profile and this information is available to selected parties on request, such as yourself and financiers.
Wearing the lender’s hat
Upon receiving your application to borrow money, the car loan company needs to figure out whether you will actually pay them back. Let’s face it, wrong or undue risky decisions may send them bankrupt. So, one of the first things they do, is to access your credit score. A high score is good, but a low score will spook them on the safety of their funds. Generally, in the finance game, the mantra is no business rather than bad business, so your case is binned.
Try a smart approach
Give your next attempt at negotiating a car loan with bad credit a chance to survive the axe.
Don’t forget, lenders need to write loans, that’s the business they are in. With the coming of the Internet and the information age, institutions have also evolved in their thinking. As they now have a more holistic insight into the history and situation of prospective clients, dependable data exists for them to actually make calls in less-than-perfect scenarios, rather than rejecting these applications outright.
If you give them reason enough to look favourably upon your approach, then, perhaps, they may do exactly that.
In a nutshell, you need to demonstrate, convincingly, to financiers that things have changed, that the present and the future is much rosier than the past.
The following suggestions may help you to achieve the above:
- Explain the past glitch in your conduct – Show that it was due to once-off or extraordinary circumstances, that there is no bad pattern, that it has been resolved and is unlikely to re-occur. Maybe you can demonstrate a medical situation, sudden unemployment not due to your own doing or even, tragically, the passing of a loved one.
- Transparency – Be honest, frank and upfront in your dealings with prospective lenders. The information which you provide may easily be verifiable. If they detect a mere hint of dubiousness, then it is almost certainly goodbye.
- Demonstrate your ability to pay the loan – Prove a stable income, use your letter of employment, payslips, bank statements or a recent tax return to do this.
- Show stability in your personal circumstances – Provide a stable and fixed address, obtain references from credible sources such as your landlord or rental agent and, if it is the case, demonstrate a clear criminal record.
- Highlight the bigger picture – Help them to see beyond the poor credit rating, show other assets that you may have, vehicles, investments and savings.
- Offer a down payment – If possible, suggest a deposit, this will demonstrate your commitment.
- Co-signee – It would certainly strengthen your application if you present a credible co-signee.
- Score – Know your own credit score. This will provide the appropriate context and style to your approach.
Get a reputable and registered auto finance broker on your side. The knowledgeable support may introduce overall positivity to the mindset and it will certainly boost your odds to get a car loan with bad credit.
As far as credit profiles go, brokers deal daily with a full spectrum of “the good, the bad and the ugly.” It is also in their best interest to get loans approved, after all, it is their bread and butter, so they will do their utmost to guide you to success. They know how to put the best spin on your application to, at the very least, get looked at by the lender and not be summarily tossed.
Your broker knows which institutions to approach to increase your chance of a favourable outcome. The application will also be passed on to several financiers, again, a big plus for your quest. If you do find success, it will certainly come at a premium i.e. the lender will charge you a higher interest rate on the loan as penalty for their increased risk on accepting your business. However, the broker will act in your best interest and advise whether the extent of the increased premium is warranted or over the top. They might even succeed in negotiating a better deal for you.
Good luck and all of the best with your car loan hunting. Remain positive and remember, every “no” might be that one step closer to the YES! for best car loan you are looking for.