Getting a Car Loan With Defaults
Getting a car loan with defaults/judgements
Getting finance once you have had defaults/judgements is very achievable and yes you can, but isn’t easy as most people think, why you might ask, because there are a lot of various scenarios that must be considered that can either get you approved or declined, its not as straight forward as having bad credit, applying for a loan and getting approved.
Everyone’s circumstances are different, there are various types of defaults and court judgments, some are accepted, and some are not accepted, in this article we are going to try and give you a better understanding of this and provide you with some important information on what will help/increase your chances of being more successful when applying for a car loan with a bad credit history.
When applying for a second chance car loan, there are a few things that a lender must consider when assessing an application which will make all the difference on a successful outcome or not, these are listed below.
Your check list for a successful outcome
You must be employed in your current job for at least 3 months, of course the longer you have been in your current job the better it is.
2. Current financial position
Your current financial position and the last 6 months, a lender is going to look at this to see that you are now and for the last 6 months in a good financial position and you are not currently and for the last 6 months going through any financial hardship, if you are then they won’t give you a loan, its common sense don’t you think.
3. Current debts
Current debts/loans you currently have must have a perfect payment history for the last 6 months only, if you are missing payments on any current commitments, then this will display that you are finding it hard to manage your current commitments and adding another loan to that list is not financially viable, and you will get declined.
4. Banking conduct/bank statements
Bank statements are a compulsory request from all second chance lenders, and they will need them for the last 3 months and in some cases the last 6 or 12 months, but in almost all cases they only require the last 3 months, the purpose of this is for a few reason listed below.
They will look to see that your pay goes into your bank account and calculate your average income over the last 3 months.
They will look to see that all liabilities have been disclosed on your application to ensure that they have all been allowed as part of their serviceability calculations and you can afford the loan you are applying for.
They will look to see that you are not over drawing your bank account on a regular basis, if you are then this will display that you are currently struggling with the financial commitments you currently have and providing you with a loan will not be viable and you will be declined.
They will also look to see that you are not dishonoring any payments with current debts you are paying off, if they see multiple dishonors here then you will also be declined, the odd exception to this maybe if you have had one or 2 dishonors with a very good reason and the payments were made up immediately then this maybe ok but will be looked at on a case by case basis only.
So, as you can see bank statements are not only compulsory, but they play a very, very important part of a lenders overall assessment when considering someone for a second chance car loan.
5. Pay slips/income
Pay slips are also required and are compulsory, a lender will always request your last 2 pay slips no more than 30 days old.
they must be proper pay slips and not hand-written pay slips, if you don’t get pay slips then they will require a letter from you employer on there letter head (proper business letter head) which will state your term of employment, gross income, net income, year to date earnings, your title and your position such as full time, casual or part time etc.
pay slips are also matched against the deposits going into your bank account for authenticity as well.
Your pay must go into your bank account, if it doesn’t and you get paid cash, then it is almost impossible for a second chance lender to consider your application for a loan, in some case they may want a recent tax return and ATO notice of assessment.
One of the most common questions a lot of people wonder about when considering to apply for a second chance car loan, is do defaults need to be paid, unpaid, on a payment arrangement, how many can I have before it’s to many, and how old do they need to be before I can apply, below we are to try to go over this, however these will be some examples and do not represent a guarantee nor does it suggest that you may me declined as they will all be looked at a case by case basis
Types Of defaults/Judgements
1. Finance defaults/Judgements
- Pay day lender loans: these types of defaults would need to be at least 6 months old and, in some cases, they would need to either be paid or under a payment arrangement for a period longer than 6 months depending on the size of the default & how many you have.
- Personal loans: these types of defaults would need to be at least 6 months old and, in some cases, they would need to either be paid or under a payment arrangement for a period longer than 6 months depending on the size of the default & how many you have.
Credit cards: these types of defaults would need to be at least 6 months old and, in some cases, they would need to either be paid or under a payment arrangement for a period longer than 6 months depending on the size of the default & how many you have.
- Mortgage: mortgage defaults are very difficult to assist with, these would have to be paid in full, however if it is a small amount for example under $10,000 and has been under a payment arrangement for a period of 6 months or more, then we may still be able to help.
- Car loans: car loan defaults are one of the worst type of defaults you can have, in most cases these type of defaults need to be paid or at least on a payment arrangement for a period of 12 months or more, and they would need to be more than 12 months old.
- Rental contracts of any kind: these types of defaults would need to be at least 6 months old and, in some cases, they would need to either be paid or under a payment arrangement for a period longer than 6 months depending on the size of the default & how many you have.
As you can see financial type of defaults need to be at least 6 months or more old, the older they are the better it is and the smaller the amount is the better it is as well, it is always best to check with us or apply for our free credit assessment, this will help determine what we can do for you, and if we cant help, then we can help you sort out a plan that will give you a chance down the track in getting a car loan based on your individual circumstances.
2. Utility defaults/Judgements
- Gas bill
- Electricity bill
- Council rates
- Water rates
The above utility defaults/Judgements are fine regardless if they are paid or unpaid as long as they are more than 3 months old, however this is also not a guarantee as it would depend on your overall profile and best that you apply for our free credit assessment to see what we can do for you.
3. Telecommunication defaults/Judgements
- Mobile phone bill/plan
- Home phone account
- Internet bill
The above telecommunication defaults/judgements are also fine regardless if they are paid or unpaid as long as they are more than 3 months old, however this is also not a guarantee as it would depend on your overall profile and best that you apply for our free credit assessment to see what we can do for you.
How many defaults/judgements can you have?
The amount of defaults/judgements you can have is really depended on the size, type and age of the default, generally more than 5 starts to become a problem, more than 10 is definitely going to be very hard to get a loan at all, however once again it is best to apply for our free credit assessment to find out as everyone’s personal circumstance/profile is different.
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