How To: Get Approved For A Secured Loan With A Low Credit Score
There are so many loan options for people with bad credit out there! They’re all good for different things which can make it even more difficult to choose.
This article will walk you through the process of getting a secured car loan with a bad credit history so you can make informed choices. We also have some useful tips included that will help you get the best value out of your next loan!
Remember: There are NO secrets to having success when you apply to get approved for a secured loan with a low credit score. It is simply a matter of making yourself appear to be a good candidate for a loan. There are some required steps to take but the truth is that ANYONE can do it!
Why Choose A Secured Bad Credit Loan Over Another Option?
People with bad credit often feel like they have very little choice when it comes to getting a loan. Most people with bad credit think that they will always have to accept a loan with a higher interest rate than necessary. That is simply not true! There are plenty of loan options for all kinds of credit scores – ask us if you’d like to know about your options.
Understanding when to choose a secured bad credit loan can make all the difference to the outcome of the situation. Having a bad credit score can also make it more difficult to get finance approved when you need it. It is wise to approach the situation carefully. But if you take the proper steps you can make the process as easy and successful as possible.
As we always say – getting approved for a bad credit loan is all about making yourself look trustworthy. Lenders are mostly concerned with your ability to repay your loan and make repayments consistently and on time.
By appearing to be less risky and more reliable you will be more likely to be approved. It also means you’ll probably be offered a lower interest rate than you would if you were considered to be of high risk.
A Secured Bad Credit Loan Is A Loan That Has Security
A secured loan for bad credit can be a useful tool to purchase a new or used car. Usually the car you get the loan for will be the security – like when you use our 24 Hour Used Car Finance. Or if you already have an item to use as security, like another vehicle, you can use the loan for a variety of reasons – just ask when you apply.
Interest rates for a secured loan can often be lower than for an unsecured personal loan. So be sure to shop around or apply through a finance broker like Hoolu that works with a wide variety of lenders. This means you can get a more competitive interest rate and a better deal on your loan terms.
Plus, if you aren’t able eligible for an unsecured loan we can give you plenty of options for a secured loan. Fill out the form below or visit out contact page to get in touch today!
If you’re unsure about the difference between an unsecured loan and a secured loan – check this article – Unsecured Bad Credit Loans Explained.
We have also spoken about using a credit card as a finance option in this awesome article – Get Cheap Car Finance With Bad Credit.
What Is The Process of Getting A Secured Loan With Bad Credit
Getting any kind of finance product follows a similar formula. Use this info to boost your chances of success. Read on below!
1. Find out what your finance options are – Don’t apply to the first place you find. Check the different offerings from at least a few credit loan providers. Or alternatively consult a finance broker like Hoolu who has a knowledge of the available options and can match you with a loan that suits you.
2. Then compare the fees, including account management and/or late payment penalty fees, as well as the interest rate. These are important because they tell you how much your loan will cost. Include and compare the fees, rates and features. Be sure to include all fees and interest into your total costs for the loan over the life of the loan.
3. Check the lender’s criteria for approval against your employment, credit history, and income. They will most likely require you to live at a fixed address.
4. Compare the monthly repayments to your budget and income. Borrowing too much can lead to financial difficulty and potentially impact your credit score negatively. Make sure you can comfortably afford your repayments. The easier it is to service your loan the more likely you are to be happy with the experience.
5. Consider the timing of your loan application – if you don’t have a fixed address, are about to travel, are not receiving a regular income, whether its from employment or pension payments like Centrelink, or already have unpaid debts, then you should probably wait until these things are taken care of.
Remember – lenders can see how many times you have applied for credit as well as how many times you have been declined when they check your credit file. Being declined many times doesn’t look good for your financial situation over time, so it’s best to avoid applying until you are sure you have a good chance of being approved.
6. Once you’ve checked everything over its time to go for it! Fill out an application and send it in. Not all loan applications have to be long and difficult! You might even find an online application like Hoolu’s is most convenient because it saves you time and changes to suit you.
7. Kick back and wait for approval. Once you’re approved you’ll have the chance to accept the terms and conditions before you receive the loan payment.
8. Make sure you make your repayments on time!
What Are the Eligibility Criteria For Getting A Bad Credit Loan?
Most applications for any kind of finance need to meet a similar eligibility criteria.
Firstly, you must 18 years of age, be an Australian citizen or live in Australia permanently, have a regular source of income. It will usually be required that you have a fixed address. For a secured loan you’ll also need details of your collateral and proof of ownership.
Your identity will be verified using forms of identification like a passport or drivers license. You’ll also need to provide information about your employment or pension status. Last but not least you’ll have to give information about your current financial situation by providing payslips or bank statements. This includes information about any debts and savings you may have.
A credit check to look into your credit history is also part of the process. This is the chance the lender has to uncover any red flags in your borrowing history. If you’re worried about your credit score, as most people with bad credit are, check out our article on how You Can Raise Your Credit Score – NOW!
What Can I Use A Secured Bad Credit Loan For?
Many lenders offer secured loans for people with bad credit. You’ll find the most common option is a secured car loan. But the type of loan you can get depends on the type of security you can bring to the agreement. Your options usually are:
– Loans for new and used cars – Using the car as security is a very common option. It may also mean you’ll be offered a lower interest rate. A loan for a car may be restricted to certain kinds of cars and/or may only be used for that purpose.
– Loans against your home equity – If you are ahead of your mortgage repayments and have built up equity then you may be able to use this as security against a loan.
– A secured loan for personal use – You can use this type of loan for any kind of purchase but you’ll still need to use an asset as collateral. Assets are anything of significant value, for example cars, motorcycles, boats, caravans, jewellery, etc.
Before You Apply – Keep These Bad Credit Borrowing Tips In Mind!
Before you attempt to get approved for a secured loan with bad credit you should remember the following tips –
– Don’t lose sight of your budget– only borrow what you can afford to repay. Don’t be tempted to over-borrow!
– Comb through those terms and conditions – it can make all the difference to the cost of the loan over time. Be sure to include any fee and charges.
– Be mindful of the comparison rate – make sure the comparison rate is true. Many lenders will advertise lower comparison rates to get business.
– Check the PDS – Product Data Sheet- to see if you have any extras included. Don’t agree to anything extra you don’t need, like insurance, until you’re sure it’s not included.
– Check the loan term relative to your interest rate. Shorter loans with high repayments will mean you spend less in repayments over time. less short terms can have you making in higher repayments, you end up paying less in the form of interest. This means short term loans can lead to savings on interest and therefore saves you money.
– Don’t forget about depreciation – all cars lose value over time, unless they are sought after or collectible. Factor this into your loan cost if you think you might want to sell the car in future.
Make sure you’re getting quality advice! Your finance broker should be able and willing to walk you through the whole process and explain everything necessary. If they aren’t willing or able then you need to stop right there and look for someone who does! At Hoolu we go the extra mile to explain everything to the customer personally and make sure they are fully aware of the conditions of their loan agreement. So when you apply with us you know you’re getting the gold standard of service.
We Can Make Your Borrowing Experience Easy!
Applying for a secured bad credit car loan can take a lot of time and be stressful. We can share our expertise with you by making the entire process as simple and painless as possible.
Hoolu is happy to work with you to get your bad credit loan approved! Get in touch with us today – click here to visit our contact page. Or fill out the form below!
Want to raise your credit score now? Read our last Hoolu Finance Blog article!
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