As the age old saying goes: you get what you pay for. Remember this when looking at your finance options for your next used car finance.
Any loan you take should be considered carefully. So must any significant finance that can be considered an expense such as a credit card. While you might need to be driving ASAP you shouldn’t take the first finance option that you find.
Choosing a loan is very strategic. The choices you make can save you a lot of money over the life of the loan. There are always fees and charges to consider. If you have bad credit you must also consider the possibility of a high interest rate and monthly repayments over the loan term.
Getting a better deal on your loan means it ‘costs’ you less in interest and fees. These savings mean more money in your pocket. Managing your bad credit loans successfully can also have the handy side effect of improving your credit score. Which will make it easier for you to get a loan in future, such as a home loan or mortgage, business finance, new car finance, lower interest credit cards and more.
What is cheap financing for cars?
Cheap finance generally refers to money that can be ‘borrowed’ at a lower interest rate and cost. A car loan for bad credit generally won’t be as cheap as one for a good credit score. But it won’t necessarily be high. Make sure you don’t accept a higher rate than necessary. Also check the comparison rate and monthly payment. It should be within your budget for the life of the loan.
Most of all you should look for competitive rates on your bad credit car finance. A good finance broker like Hoolu will be able to offer you the best deal across a range of products and services – ask us how!
Cheap Car Financing Options
There are several types of cheap financing options. The most common include –
Paying For A Car With A Credit Card
Credit cards are not the ideal solution for financing a used car purchase. Though they can present as an easy to get option they often have a high interest rate in comparison to lenders.
If you choose to put a car on your credit card make sure you have reviewed the interest rate. Then think about your income and how long it will take to pay back. This is an easy way for consumers to get themselves into a lot of debt very quickly. Most credit cards have high interest rate because they are intended for short term borrowing.
Secured Bad Credit Car Loan
A secured loan is a loan that is secured by equity. For a secured car loan the car itself acts as security for the loan. If you are unable to make repayments and cannot afford the loan the lender may choose to repossess the car. Once they repossess the car they will usually sell the car to recover any outstanding costs. This will result in a negative strike on your credit file for defaulting on loan repayments.
Unsecured Bad Credit Car Loan
Like all loans an unsecured loan requires repayments to be made. This includes any agreed charges such as interest or fees and usually have a fixed interest rate. Unsecured loans are also usually short-term and for a smaller amount.
Unsecured loans are simply a loan that is not secured by equity. Equity is an asset that acts as security against a loan which is forfeited when repayments aren’t made. They are approved when the borrower can make the repayments. If you default on these types of payments you will incur fees and charges. This includes the possibility of having to deal with a debt collection agency.
HOW TO: Buy A Car With Bad Credit
Keep the list below in mind when you’re looking to finance your next used car –
1. Find The Right Finance Broker Or Lender Who Works With Bad Credit
You’re looking for a lender or finance broker who specialises in bad credit loans. This rules out most big banks and many private lenders. The simple reason is risk.
A questionable credit history signals that you may be difficult to lend to. Banks and lenders are mostly concerned with your ability to make your loan repayments. But many lenders are very understanding and specifically cater to bad credit loans with a variety of products and services. Many even specifically offer bad credit car loans (psst, we do!)
Remember that an experienced finance broker such as Hoolu will be able to direct you to the best loan options. We work with over 35+ different lenders for all kinds of bad credit finance. From same-day 24 hour car loans, to business finance, large personal loans, motorcycle loans, leisure vehicle loans and much more!
2. Limit Your Finance Applications
We have spoken about the importance of limiting the number of loan applications you make in other blog articles. This is because applying for a loan means your are giving permission for a finance broker or lender to access your credit history file. Your credit file contains for full financial history as well as a record of how many loans you have applied for.
If you have made many applications for loans and/or used car finance then this can signal a potential problem. Generally applying for many loans gives the impression that someone might not have been approved many times because of their financial situation. Applying for fast cash or payday loans can also show that the person has a history of difficulty in managing their finances.
So it is best to limit the number of loan applications you make to ones that are necessary and stay away from loans that can look bad for your ability to manage you finances. You want to give the impression that you can make your loan repayments on time and reliably for the full loan term. This applies to both short term and long term loans.
3. Get Help From The Expert Finance Brokers At Hoolu!
If you’re not sure about the best way to go get your next car finance then please feel free to contact us. We’ll be happy to guide you through the process.
We’re all about saving you time, money and difficulty. Ultimately we aim to help you put your best application forward for approval. We also use our knowledge to match you with the best options from over 35 different lenders, which ultimately means you get a better deal on your loan.
Check Out Our Last Article!
Need A Loan? Get In Touch Today!
We’ll make your borrowing experience smooth, enjoyable and as stress-free as possible.
Let us walk you through the process!
Fill out the form ✎
Or you can call us on 1300 0 HOOLU or 1300 046 658 ☏