There are a whole range of circumstances that can leave businesses in a position of having a poor or bad credit rating. This can be a result of loan payment or other credit account defaults, bankruptcy, poor financial management or business turnover simply not sufficient to meet expenses. While running a business in boom times can still have its financial challenges, operating within the restrictions and limitations imposed by the COVID situation has been even more challenging for many. The fallout leaving some with a bad credit rating and difficulties securing motor vehicle finance. Jade Car Loans outlines what to avoid, what to expect, how to connect with lenders and the finance options available for business owners to secure a bad credit car loan.
Bad credit is considered as having a low credit score. The lower the score, the worse the credit rating and the higher the risk factor. This is different from ‘no credit’ which is having no credit record, profile or score at all. People or businesses that have never borrowed or entered into a credit arrangement would be in this category and that would be extremely rare in contemporary business environment.
What to Avoid
Before getting into what is available and possible for those seeking bad credit motor vehicle finance, here are a few tips on what to avoid:-
- Going alone and applying for the same loan to multiple banks and lenders. Multiple finance applications can make the situation worse as lenders will report loan applications to the credit bureaus and this can be seen as desperation. For more on how credit reporting agencies work, refer the MoneySmart. When a finance broker makes those applications on behalf of a customer, the applications are not reported in this way and hence the process does not have the same negative impact.
- Holding multiple loans and credit accounts already may exacerbate the situation by increasing the risk rating as assessed by some lenders. Reducing existing debt by paying out or down loans may increase the prospects of a better priced bad credit car loan.
- Agreeing for a desperation car finance offer at an exorbitantly high interest rate in the fear that maybe that will be ‘as good as it gets’ for your situation. It is worth doing more research and making more enquiries as to what is available to you, especially through a car finance broker such as Jade Car Loans.
The credit profile or credit score is the key to a good car loan. The difference between ‘poor’ and ‘bad’ credit may be the difference in the credit score so addressing issues with a credit profile prior to applying for a new loan may result in a better outcome.
A wide range of payments are reported to credit agencies for listing and assessment on a credit profile and which contribute to the credit score. But there may be errors or entries that are outdated. There is a process whereby individuals can have these issues corrected. Refer to MoneySmart for official guidance.
Connecting with Bad Credit Lenders
Not all banks and finance companies offer bad credit car loans. There reasons will vary with some related to their status and corporate guidelines and others possibly by choice. But there are predominantly non-bank lenders that do provide this type of finance. These are lenders that may take into account the reasons as to why the bad credit rating has come about and as such offer acceptable and workable interest rate finance.
Many will operate primarily as business-to-business lenders meaning within the finance sector. Brokers like Jade Car Loans provide access for customers to these specialist non-bank lenders for bad credit car loans.
Jade Car Loans is accredited with many banks and non-bank lenders which provides us with a wide scope of options for our customers seeking bad credit finance. Our consultants handle the approach to request a quote, negotiate the car loan interest rate and any conditions the lender may choose to attach to the finance.
Expectations and Possibilities
Achieving workable bad credit car loans are a realistic possibility but applicants should know what to expect. Possibly be prepared to compromise on choice of vehicle and preferred finance arrangements.
- The risk assessment of a bad credit loan application will higher than for a good credit application. The higher risk assessment can play out in a number of ways:-
- The total loan amount requested may not be accepted by lenders. Applicants may have to be more reasonable with the loan amount being requested. This may mean opting for a lower priced vehicle and /or making an upfront payment to reduce the overall amount being requested. No deposit finance may not be offered on all bad credit car loans.
- The interest rate offered is likely to be higher than that advertised by most lenders. The advertised interest rates are typically based on a good credit profile. While lending interest rates in general are at historic lows as the RBA has kept the official cash rate on hold, such rates may not apply to bad credit car loans.
- While the vehicle is used as security against the loan, additional security may also be requested by a lender.
Bad Credit Business Vehicle Finance
Bad credit motor vehicle finance is not a specific loan type but a category which describes the applicant. So when a bad credit applicant is approved for finance, they may have the choice of finance from our portfolio of business vehicle loans:
- Sole Trader Motor Vehicle Finance
- Car Lease with Bad Credit
- Bad Credit Car Commercial Hire Purchase
All bad credit car loans need to be individually quoted. So get in touch with us for a confidential discussion and obligation free quote for bad credit motor vehicle finance which will work you’re your cash flow and circumstances.
Contact Jade Car Loans on 1300 000 003 for bad credit car loans.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.