Break Free Home Loans are a leading Melbourne mortgage broker, with over 20 years of industry experience. We provide lending solutions and advice tailored to your needs. We work closely with clients as trusted advisors and are accessible to clients when needed.
Our brokers work hard at understanding our client’s unique circumstances and helping them overcome common home loan challenges. Whether you’re a first home buyer or an experienced investor, we’ll help you find the best home loan for your situation. Whether you’re self-employed and have trouble proving your income or you’re a contractor or casual worker, we offer solutions for all types of clients’ income sources.
If you have bad credit, you may still be able to get a car loan. However, you may have to pay a higher interest rate and be required to provide collateral. Break Free Home Loans work with specialised lenders who offer second chance car finance options to suit your needs. We regularly connect borrowers to bad credit car loans Melbourne lenders so they can find the right loan to purchase their vehicle.
What Is A Bad Credit Car Loan?
If you need a bad credit car loan in Melbourne, there are a few things you should know. First, bad credit car loans are available from a range of lenders, but you may have to pay a higher interest rate than good credit borrowers. Second, you may be required to provide collateral to secure the loan. This means that if you default on the loan, the lender could seize your assets. Furthermore, car loans for bad credit tend to have shorter repayment terms so you’ll have to pay off the amount you borrowed faster.
How It Works
While it may be difficult to qualify for a car loan with bad credit from a traditional lender, non-bank lenders can still offer you funding. Bad credit car loans are similar to other car loans, but because of the increased risk to the lender, the interest and repayments are usually higher.
At Break Free Expat Home Loans, we work with a wide range of bad credit car loans Melbourne lenders. That’s right even bad credit applicants can secure reliable second chance car finance. When you apply with an online car loan bad credit lender, the process and documentation requirements won’t be as strict, rigorous or long. With their more lenient lending criteria, lenders won’t decide how much you can borrow based on your credit score. They will let you demonstrate your ability to repay the loan in other ways.
Who Can Get The Loan
- You receive disability or parenting pension payments
- You’ve been refused credit elsewhere
- You’re retired and are on a pension
- You receive Centrelink benefits
- You don’t have good credit history
- You have a bad credit score in the past
Reasons Why We Choose Bad Credit Car Loans
Bad credit car loans or second chance car loans have their own advantages and disadvantages. Like any financial product, each client must determine whether the benefits outweigh the risks.
- Much easier for private lenders to approve your loan
- Manageable weekly, fortnightly or monthly repayments
- Flexible repayment terms to suit your circumstances
- Chance to repair and rebuild your credit rating
- Bad credit lenders can be more fair and understanding if you’re having problems with your repayments
- Lower borrowing limits
- Higher interest rate which adds to the cost of the loan
- Security may be needed for larger loans
Requirements To Qualify For Second Chance Car Finance
You don’t need to wait for ages to get your loan approved. The best bad credit car loans lender will allow you to prequalify so you can finance the car you want much sooner. The following are some basic conditions lenders will want customers to meet:
Be an Australian resident. You will need to verify this information with either a passport or some other form of government-issued identification. You can also prove your residency by showing a minimum 6 months lease of where you live.
Recent Credit History
Being Discharged From Bankruptcy
You should not be affiliated to any debt or bankruptcy agreements. Pay off any outstanding debts in full to improve your credit score. This involves all forms of consumer credit whether it’s revolving credit, charge cards, instalment credit or non-instalment or service credit.
Being Capable Of Making Your Repayments
Check if you can afford the repayments over the life of your loan. All lenders will charge fees and charges, so it is important to compare these before you choose a loan. Some of the fees you may be charged include application fees, early repayment fees and ongoing account-keeping fees. You need to compare the APR of different loan products to find a competitive loan that fits into your budget.
How To Get A Second Chance Car Finance In Melbourne?
To apply for bad credit car loans Australia finance lenders, the process is relatively quick and simple. With more lenient eligibility criteria, you may even be able to complete your entire application online.
Documents You’ll Need
The information you need for your loan application should be easily on hand. You must confirm your contact details, address, employment details and regular income and expenses. Government issued ID such as your driver’s licence or passport can help speed up the application. Most lenders will ask to see your bank statements from the last 3-6 months which you can find securely online in a matter of minutes. Once you’ve submitted your application, it can take as little as 24 hours or a few business days for your loan to be approved. Afterwards, you’ll receive the funds in your nominated bank account. You’ll then have to start making regular payments according to your repayment schedule.
Available Types Of Loans
At Break Free Home Loans, we always take into consideration your circumstances and make sure payments are affordable for you. If a bad credit car loan isn’t the best option for your case, there are always other types of finance available to purchase your car. The following examples are alternatives you can explore:
Guarantor Car Loans
If you are not eligible to borrow money on your own, it’s easier to get your car loan approved by having someone act as a guarantor. However, this person will have to take responsibility for the loan if you default. This arrangement can risk the borrower’s relationship with their guarantor in the event of a nonpayment, so be sure to consider this carefully before making any decisions.
Car dealers may offer a finance option that works similarly to a bank loan. Oftentimes, the main difference lies in the requirement for a balloon payment at the end of the loan term to own the car. Dealers also carry out a credit check and other assessments before approving finance for the borrower. They may also charge a higher interest to borrowers with bad credit due to the increased risk of the loan.
A secured car loan may use the car or another asset as a collateral. This means, the car or asset will be sold by the lender to repay the loan if the borrower defaults. This approach lessens the risk for lenders than an unsecured loan, which allows them to provide loans with better interest rates and repayment terms. For a similar reason, they may also be more willing to provide a car loan to a bad credit applicant when the loan is secured.
Unsecured car loans do not require any guarantee. However, if you get approved for an unsecured loan, there is always a possibility of the lender taking legal action if they need to reclaim any losses. In this case, your credit rating will be negatively affected.
Will I Pay More If I Have Bad Credit?
5 Tips Before Taking A Bad Credit Car Loan
Check Your Credit Profile
Research Different Repayment Ways
Calculate Your Monthly Repayments
Calculate the amount of your repayments. This includes the monthly amount, interest and any fees. Consider your loan obligation against the length of your loan. Longer loan terms will make your loan amounts more affordable, but you may end up paying more in interest. Shorter loan terms will incur higher loan repayments, but less in interest and your loan will be paid off more quickly. You have to determine what suits your budget and lifestyle best.
If Possible, Trade Your Old Car
You can save money by reselling your used car for a profit. When you do a trade-in with a dealership, they’ll make note of the trade-in value (the price you get for selling the car) and offset it with your new one. You can also opt for selling your car in parts. If you sell your old car as you get a new one, you may be able to shave off some costs. Getting the money upfront for the sale of your old car allows you to use those funds as the deposit of your new car loan. This will show the lender you are a good borrower and will also reduce your regular repayments.
Disability Home Loans
There are several disability home loans available in Melbourne, and they can be a great way to get on the property ladder. However, it’s essential to do your research before applying for one of these loans, as they can come with high-interest rates and fees. If you’re considering applying for a disability home loan in Melbourne, Break Free Home Loans are ready to help you!
Compare Bad Credit Car Loans In Melbourne
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Frequently Asked Questions
Can I Get A Bad Credit Car Loan In Melbourne?
Yes, you can. A number of non-bank lenders offer credit car loans for individuals with bad credit. You will be able to qualify if you fulfil the basic requirements regardless of not meeting more traditional lending criteria. This includes having a poor credit score, receiving benefits or pension or having been refused credit elsewhere in the past.
What Documents Do I Need For A Bad Credit Car Loan?
- Your contact details and address – usually in the form of a lease to prove your residency
- Identification that is government issued – can be driver’s licence or passport
- Employment details and regular income and expenses – from your personal bank statements, letter of employment, contracts and other acceptable proof of income and employment
What Types Of Bad Credit Car Loans Are There?
Fixed loans allow easier repayments, while variable loans will use rates that fluctuate according to the market rates, making your repayments change over time. Variable loans often provide more features, but consider whether these features give you the value you need and if there are any fees charged for their use.
Secured loans require assets to be put up as collateral, and they will be taken by the lender if you default on the loan. As there is less risk for the lender, however, you can enjoy a lower interest rate for borrowing. Whereas with unsecured loans there is no such requirement. However, in the event you are unable to pay off your loan, the lender can take legal action against you. You can also look into using a guarantor for your loan or compare internal finance options from your local dealership.
Will I Qualify For A Second Chance Car Finance?
- Be an Australian resident
- Prove you have stable employment
- Have documented credit history
- Currently not affiliated to bankruptcy or major debt agreements
- Be able to afford your loan