Getting a car loan with defaults
It is surprising to see how many people actually have defaults noted on their credit files. The large telecommunication and utility companies sometimes jump right to placing a default on your file without a lot of opportunities to make payment instead.
However this attitude can leave good people in unfortunate positions when it comes to their credit history and submitting a car loan application. Preventing them from getting the finance they need or want.
However, just because you have a default doesn't mean you won't be able to get a loan, often it depends on what the default was, how large it was and if it paid or unpaid.
Telecommunication or utility defaults
These types of defaults can include things like unpaid electricity, phone and internet bills. It is still possible to obtain motor financing with unpaid defaults if they are telecommunication or utility company defaults.
Some lenders may request that these are resolved prior to your car loan settling and other lenders may disregard these all together and not require them to be paid.
If you have many of these types of defaults though, more questions will be asked as to why and may make it more challenging to obtain approval.
In many cases, if you have outstanding utility bills it's usually best to deal with them before applying for your car loan to make the process smoother.
Other financier or lender defaults
It is very hard to obtain car financing if you have outstanding defaults to another financier or lender unless you have a good explanation. If you do have a bad repayment history noted on your credit file, for example, you will need to provide strong documentation and evidence to dispute what is recorded in your credit report.
Issues like failing to make payments on time can reflect poorly on your ability to service a loan and future credit assessment. As a result, these types of defaults are likely to have a significant impact on the chance of getting your car loan approved.
Most motor financiers will want these resolved prior to lending you more money for a car, but some leniency may be given if the size of the default is quite small.
Outstanding court judgements and writs
If you have an outstanding or finalised financial court judgement, various factors such as who placed the judgement on your file and for how much will be dependent on whether you could still obtain car loan approval.
Looking for a bad credit car loan?
In summary, small defaults for things like telecommunications or utility bills normally won't stand in your way when applying for a car loan, though they can increase your interest rate and generally it's best to repay them where you can.
Defaults for finance on the other hand can make it really difficult to get the deal you're after, so make sure you stay up to date with your loan repayments each month to prevent future disappointment.
If you've got a poor credit history, talk to one of our expert brokers to help you find the best bad credit car loan deal available. With access to a wide range of lenders and products, we'll be sure to find something to suit your needs.
FAQs
What is a default?
What counts as a default? A default is an overdue debt of $150 or more and these can remain on your credit report for up to 5 years, even after you've paid off the owed amount. Defaults can have a negative impact on your credit score and are likely to make it more difficult to get approval for financing like a car loan.
Can I get a car loan if I have been discharged from a bankruptcy?
It is possible to get a car loan if you are a discharged bankrupt, however, there are only a few lenders that will provide this service. It will also depend on the applicant’s circumstances, as well as which lender is considering the application.