If you’ve been rejected from obtaining car finance due to a poor credit history, there may be more to the story. Did you know unpaid defaults could lurk on your credit history without you even knowing it? Some large corporate businesses can tarnish an otherwise good record if you've ever defaulted. These defaults can range from small unpaid phone or utility bills to missing car loan payments.
It's important to be aware of these when applying for a car loan and know what your options may be, which is where Savvy can help you out. Learn more about car loans with unpaid defaults with us today!
How to get a car loan with unpaid defaults
There are lenders operating in Australia who can approve car loan applications even if the borrower has unpaid defaults on their credit file. These specialist lenders work with customers who’ve struggled with their credit in the past, such as those with bad credit or profiles that otherwise don’t meet traditional lending criteria.
Whether you’re approved for a car loan with one of these lenders will ultimately come down to their lending criteria and factors such as the nature of your default, its size and how recently it occurred.
Unpaid defaults are more common than you think
Not paying a phone, gas, electricity or internet bill may put an unpaid default mark on your credit history. As mentioned, it’s still quite possible to take out a car loan with an unpaid default, as some lenders understand how big service and utility providers are over-eager with handing people defaults.
On occasion, some financiers will ask for the defaults to be settled before considering lending to you. Others may not even take these defaults into account, depending on the frequency and severity of the defaults. If you have a lot of defaults over a given period, it may give lenders cold feet as they see you as a higher risk.
Other types of defaults
Unpaid phone or utility bills fall at the smaller end of the default spectrum. There are many more serious defaults that could make getting a car loan more difficult for you. These include:
- Outstanding defaults to other financiers
- Outstanding defaults to banks or other financial institutions
- Outstanding court judgments or writs
If you’ve defaulted on a loan such as a car loan, home loan, personal loan or business loan, many lenders will have reservations about lending to you. You’ll have to obtain and produce evidence to dispute what's already on your credit history. On average, car financiers will want these defaults settled before giving the green light for a car loan. If the defaults are small or even negligible, a few lenders may waive their usual restrictions in light of this information.
Court writs and judgements
In some cases, car financiers may still approve your application if you have pending or incomplete court judgments or proceedings relating to debts or other financial matters. Court judgments and writs that have been handed down and actioned that are insubstantial in nature may be overlooked by some car financiers, and you may still be able to gain some sort of car loan.
In most cases, you will need some supporting evidence and transcripts so your lender can assess your position. If you’re appealing your case in the courts and on favourable grounds, some lenders may not take your legal history into consideration.
If you’re unsure about your ability to access car finance with unpaid default or court judgments against you, talk to one of the financial professionals at Savvy.
Why apply for a car loan with Savvy?
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How to apply for your car loan with Savvy
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Fill out our simple online application form
Tell us about yourself and the car and loan you’re after. This will include information about your income, employment and credit score and helps us find the best available loan for you.
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Supply any required documents
After you complete your application, we may request further documentation to verify details such as your employment and income. These can be submitted online via our portal.
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Discuss your options with us
Once we have all the information we need, we’ll compare the offers available to you from our lending panel. Your consultant will reach out to you and talk you through your car finance options to get the all-clear.
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Find your ideal car
If you haven’t already decided on (or found) your ideal car, our in-house car broker team, Vehicles Direct, can search our national network of dealerships to find the best available model for you.
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Have your application prepared and approved
Once we have all the info we need, your consultant will get to work preparing your application for submission. You can receive formal approval as soon as one business day after it’s submitted.
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Sign on the dotted line
We’ll send through your final loan documents and other forms to sign electronically. Once settlement is complete (which we’ll also handle for you), you’ll be the proud owner of your new or used car!
Car loan eligibility and documentation
Eligibility
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Age
You must be at least 18 years of age
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Residency
You must be an Australian citizen or permanent resident (or, in some cases, an eligible visa holder)
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Income
You must be earning a stable income which is enough to comfortably support your repayments (this can start from as little as $20,000 to $26,000 per year)
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Employment
You must be employed and earning a consistent income from your job
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Credit score
You must meet your lender’s requirements related to your credit score
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Car
Your car must meet your lender’s requirements related to type, age and condition
Documents
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Driver's licence
Front and back (or another form of government-issued ID)
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Payslips
Your last two consecutive payslips (or your last tax return if you're self-employed)
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Savvy forms
Your Savvy application, consent form and credit guide (supplied by your consultant)
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Car details
Information about your car, such as its age, is handy to have
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Bank statements
90 days of bank statements may be requested, but not always
