Sometimes it can feel like bad credit haunts every aspect of your life and doesn’t allow you to live a full life. But that doesn’t have to be the case.
If you do some research and build your knowledge, there are ways you can get a car loan even with bad credit. These bad credit car loans might have limits upon how much you can borrow, but that’s better than nothing.
Keep reading to find out how you can figure out how much money you can borrow with a bad credit car loan, depending on your specific situation.
How Do Banks Decide How Much You Can Borrow?
As you might already know, banks and other car loan services that offer car loans and other such monies have certain criteria upon which they base your eligibility for a loan (or not). That’s essentially your credit score.
It indicates to these institutions how reliable and responsible you are when it comes to money.
If you make a lot of good financial decisions throughout your life, then your credit score will be high, indicating to the banks that you are a good borrower. They will feel comfortable lending higher amounts of money to you because there’s no worry that you won’t be able to pay it back.
That’s why it’s so important that you pay your loans and bills on time because that will improve and upgrade your credit rating with the banks and they will be more inclined to offer you more and more money in the form of a loan or credit card limit increases.
A Credit Score Isn’t the Only Determining Factor
A credit score isn’t the only way that banks decide how much you can borrow. Yes, it’s one of the big factors that determine how the banks perceive you as a borrower.
But there are other things as well. This is because banks and other financial institutions know that life happens and sometimes you can make a slew of bad financial decisions in a row, which can cause your credit score to fall apart pretty quickly.
That doesn’t mean that you should forever not get to borrow any money at all. If you go and speak to a car loan specialist in person and explain your situation, they would be able to see that your current financial situation is just temporary. And they would be able to override your credit score to give you a loan.
That’s why it’s important to visit these institutions in person, rather than just applying online. Don’t be lazy or shy about it. Share your full story in person and garner the sympathy of the lender.
Do You Have Any Family or Relative Support?
Another factor that can work in your favour is if you have a family member or relative who can offer you support in this tough time to allow you to get that car loan you desire. In the modern world, living without a car can be almost impossible.
But if you can’t get a car loan and you don’t have the full amount saved up, then it will be impossible to buy a car, used or new.
That’s why you could appeal to your family or relatives to become guarantors on your behalf. If you have had a positive financial history till now and this is just a temporary rough patch, then they will be happy to help you out. Have a plan in place for how you will repay them, perhaps with a nice dinner out or something else they would like.
Figure Out How Much You Can Borrow
As you can see, you don’t have to worry or restrict yourself if have a bad credit history. Don’t let it hold you back from applying for car loans.
Another thing to keep in mind is that you might not be able to borrow the full amount that you desire but you might be able to borrow a partial amount, based on your credit history and your guarantor’s credit history.
That’s why it’s important to keep your head up high and go into the car loan office with all the necessary paperwork. Make sure you have notes on your financial history to prove that you are a good borrower in general. Also, have a plan with you on how you are going to pay off the loan, showing the creditor your monthly outlays, and your income.
This way they will be able to see clearly that you are not just asking for a loan for the sake of getting more money, but because you need it for a definite purpose.
If you already know what kind of car you wish to purchase with the loan, then it’s a great idea to shop around for the best car loan for that amount. You never know which car loan service might end up giving you a better interest rate and more money for your car loan application.
A bit of research in this regard can help as well. There are car loan services in Australia that serve folks with bad credit like you. They know how difficult it can be for Australians with a poor credit history to get a loan, so that’s why they will be able to empathize better with you.
How Much Money Should You Apply For?
There’s also this idea that you should just apply for the maximum amount that you can afford or that the lender will grant you because you never know. If you only apply for the value of the car you wish to purchase, then you are restricting yourself in a way.
Think about anything else you might want to use the money for, perhaps to upgrade the car or to pay for some trimmings. If you apply for the maximum amount you can get, then you can have extra cash for these items.
It also gives you a bit of breathing room, in case you are having a hard time once or twice paying back the loan on time. You can use the extra cash for the monthly loan payment.
Also, don’t forget to think about the future when thinking about how much money to apply for. If you know that you have some major expenses coming up, like college tuition for a child or a tax repayment, then you will want to account for that in your plan as well.
Use This Car Loan to Boost Your Credit Score
Don’t get a loan that’s far beyond your capability to pay back each month. You must use this car loan to boost your credit score. The problem is that many people get a car loan that’s too expensive for them, and then they end up defaulting on their loans, creating a worse financial situation for them and their loved ones.
It’s important to keep affordability on top of your mind whenever applying for a car loan. If you can’t afford a more expensive car, then consider getting a cheaper one for now. You can always upgrade later when you have more income or more leeway in your finances.
There’s no need to have it all right now. A bit of flexibility in your wants and desires, and you will be further ahead in your financial future.
If possible, think about delaying for a few months, and saving up for a downpayment as well. With a downpayment in hand, you will be able to get better deals on your car loans, with a lower interest rate. And the lower your interest rate, the faster you can pay down your loan.
Remember that car loans for bad credit are more expensive than other car loans, so you don’t want to take on too much of this kind of car loan. Always think about how you are going to pay off a bad credit car loan first, before taking on any more debt. It will probably have the highest interest rate of all your debt, so work hard to pay it off first.
Once your credit score is back up to par, then you can get a cheaper car loan, but until then, you will want to be careful and cognizant of taking on too much debt.
Bad Credit Car Loans – Are You Ready to Apply for One?
Now that you know how much money you can apply for, you are ready to get your bad credit car loans. It might be more expensive and a longer process than other loans, but at least you will be able to get transportation after this which will allow you to stay mobile and earn your livelihood.
Still looking for a bad credit car loan? Apply for a loan with C1 Car Loans – it takes less than 10 minutes to apply for a car loan with us and you can be back in the driver’s seat in days.