One of the most common questions we get asked as a company is "with my bad credit, what is the interest rate on a loan going to be" ? In this guide I'll have a crack at answering that question!
If you're wondering if you have any bad credit, you can request a copy of your credit file from Equifax. Provided you meet their criteria, you can get a copy of your credit report for free every 12 months.
As a finance broker, our job is to shop around for the best outcome for your situation. Part of this process is looking at your credit profile and choosing an appropriate lender.
"Bad credit car loan interest rates start at 10% and can go right up to 29.95% depending on which lender we can use."
The things that influence the rates for bad credit car loans are:
Bad credit car loan interest rates start at 10% and can go right up to 29.95% depending on which lender we can use.
There's a couple of things that you can do to help us negotiate a better rate with our lenders. These include:
Unfortunately, the diversity of interest rates for bad credit loans on offer mean that we need to conduct an assessment before we can estimate the rate. As part of our process we will give you an indicative quote based on our findings after we conduct our initial assessment.
While this initial assessment is not always accurate, it will at least provide you with a guide.
Please note: Responsive Lending will not charge you if you choose to withdraw after receiving the initial quote.
When you're ready to apply, please follow this link to check out our Bad Credit Car Loan page.
One of the most common questions we get here at Responsive is "Do you guys run a credit check? I've seen ads for no credit check loans". For starters, yes we will run an enquiry on your credit file. No, this initial enquiry doesn't affect your score, but any subsequent checks from lenders can impact it.
So why don't some companies run checks?
In our experience, there are two types of loan / credit companies that provide no credit check loans. They are:
A rent to own provider will sign you up to a contract where you agree to rent the car from them for a set period. At the end of the period, there can be the option to buy the car from the provider at a set buyout price.
These agreements are most commonly used for appliances (Radio Rentals, Make it Mine etc). However, recently we have seen quite a few of these companies offering the same service for cars.
Rent to own companies usually still do credit checks, however we have seen them advertise no credit check loans.
Why should you avoid them?
While a rent to own contract might be a good option, there are a few things to consider.
The biggest caveat is that you don't get ownership of the car until after you buy it out. So if you're looking to upgrade during the contract you might be out of luck.
Often these contracts can have large break fees. So in addition to not owning the car, you might have to pay large termination costs if you want to change cars.
Lastly, most of these contracts include the costs to upkeep the vehicles (registration & servicing). While this might sound great, the provider will often charge a markeup on the servicing costs.
When should you consider them?
If you have been rejected for a bad credit car loan due to recent finance defaults, a Rent to Own contract might be the best way for you to get back into a car.
Payday loans, or Small Amount Credit Contracts, have been in the news a lot recently. The government has criticised them for predatory behaviour and excessive charges to customers.
Payday loan providers often provide no credit check loans to reduce their costs.
Why should you avoid them?
Small loans / payday loans often attract high interest rates and short terms. Additionally, loan amounts are usually restricted to $2,000.
Lastly, payday loans are often frowned upon by other finance companies. We quite often have car loan applications declined by lenders due to payday lender use.
When should you consider them?
Short term loans do have their place. They might be especially helpful when you have one off bills such as registration or bond expenses. However, check out our Bad Credit Personal Loans page before you apply elsewhere.
Using a bad credit loan specialist is a great alternative to rent to own or payday loan providers. Here at Responsive, we call ourselves bad credit loan specialists because we compare multiple lenders who all have different criteria to get you the best outcome.
Q. I'm currently in a Part 9 (Part IX) Debt Agreement, can I get a car loan?
A. Short answer is Yes, we can help customers in a Part 9 Debt Agreement. Keep reading below for further information.
Part IX debt agreements were introduced for consumers as an alternative to full bankruptcy. They gave the option for consumers to consolidate their unsecured debts. If you're currently in a Part IX, your options for borrowing are limited.
Firstly - if you are considering going into a Part 9 Debt Agreement, we recommend that you get Individual Financial Advice from a consumer advocate such as a Financial Counsellor. Financial Counsellor's are a free service and can provide you with the different options before you go into a Part IX. Locate a local financial counsellor here.
Responsive Lending has the option of 3 lenders which we can use for customers who are in a Part IX. While their criteria differs, the common factors are below:
Lenders also value stability in residence and employment. The longer you have been at your current address and job, the better.
If you're ready to apply, or have any questions, visit our Bad Credit Car Loans page
Q. Why Do Bad Credit Lenders Need My Bank Statements?
A. Bad credit lenders request to see bank statements for bad credit loans as they use the conduct of the statements as an tool to analyse the loan.
Q. What Do They Look For?
A. It can depend from lender to lender, but what they usually look for is:
Q. How Can I Send My Statements Through?
A. Responsive Lending partners with Proviso for the fast and secure bank statement submission. If you have applied for a loan through us recently, you will have received an email from us with a personalised link to send these through.
Q. Are There Any Other Options?
A. Yes, if you don't feel comfortable using our online system, you can send through your bank statements as a PDF to your loans officer.