One question we get asked quite a lot at Bad Credit Car Loans is whether people with unpaid or paid defaults or court judgements can apply for a car loan and have a reasonable chance of approval and the answer is yes.
What are defaults?
If you aren’t sure about what defaults are, here’s a primer. An default indicates to lenders or financiers you did not pay back a bill or missed a loan repayment and still have money owing to these companies if it’s unpaid. If the debt has been paid it will still however be listed on your credit file as a paid default.
I’ve heard some companies will mark me with a default over trivial amounts. Is that true?
Yes, many stories about large corporations or big service companies hitting everyday people with unpaid defaults have a lot of truth to them. These range from not paying a disputed phone contract cancellation fee, or forgetting to pay up your gym membership. Electricity, water companies, gas companies and Internet service providers have the ability to list an unpaid bill or credit facility on your credit file. In some cases, you may not even realise you have a default on your credit history.
Can I get a car loan with an unpaid or paid default?
It depends. Unfortunately, there’s no clear cut answer here. What lenders have to consider is the severity of the default before making an assessment on whether to lend to you.
If you have a minor default such as not paying a small bill back on your mobile phone for example, lenders may overlook the blemish on your credit history and proceed with approving your finance.
If you have larger unpaid amounts it makes it a little more challenging however still possible.
Each situation is weighed up on its unique circumstances. There is no “one answer” to the question.
What can I do to improve my chances?
If you are in the position to pay back your unpaid default, you should do so immediately or make an arrangement to have it paid over a period of time. Additional improvements are making sure that all current bills are being paid on time like your phone bill, rates notice, mortgage, rent, car loan payment etc. Having current accounts up to date goes a very long way in securing approval.
The team at Bad Credit Car Loan know everything there is to know about defaults and how they affect your chances of taking out a car loan. We know people make mistakes and they shouldn’t have to carry those mistakes around forever. We’re standing by to answer all your questions about bad credit car finance. Contact us today.