Bad Credit Car Finance for Vehicles

Approved car finance for people with a bad credit record enabling them to buy new or used vehicles from dealerships in South Africa is not something that can easily be obtained from banks such as ABSA, FNB, Standard Bank and Nedbank.

The banks operate according to strict guidelines established by the National Credit Act so if you need to buy a car but are blacklisted due to previous financial difficulty you are going to have to apply via an alternative lender.

There are lending companies that will be prepared to approve applicants of a loan even if they do not have a completely clean financial history but there will certainly be strict conditions to adhere to.

Most people need a car in this day and age, and many of them, when they want to buy another car, simply go out and buy one. However, for those people that have bad credit records, buying a car is not that simple.

If you are one of these unfortunate individuals, and because of your bad credit score, feel that your chances of purchasing a car are just about zero, then read on.


4 tips on how to find bad credit car finance


Tip #1. Your FICO score

It is very possible to get a loan for a new or used car, but it depends a lot on your FICO score. Your FICO score could range from anything between 300 and 850.

The lower your score, the higher interest rates you can expect to pay on a vehicle loan. If your credit score is low, it does not lower your chances to acquire a loan to buy a car, but your low credit rating will defnitely affect the amount of interest that you pay on the money you have borrowed.

Before you rush out to try to get a loan, apply online for a copy of your credit score and report. Should you find that your score is below 600, then consider waiting a while before applying for a loan, and rather spend some time, then next six months at least, on making every effort to improve your score.

At the same time, do whatever you can to save some money towards a deposit for your car. The more deposit you have, the better your chances are of acquiring a loan, with lower interest rates.


Tip #2. Stay steadily employed

Apart from your credit rating, car loan companies will require that you are steadily employed. In addition to this, loan companies most times also require you to earn a minimum salary per month.

Working for the same employer for 90 days is usually considered steady employment.

In other words, avoid changing jobs every few months, because the longer you are employed by one company, the better your chances are of acquiring a loan.

As proof of your employment, the lending company will probably request paycheck stubs from you, going back a few months.


Tip #3. Consider approaching a sub-prime lender for a loan

Your natural reaction will be to have a look at what car dealerships have to offer, but it might be a good idea to first try getting approved by an online sub-prime lending company.

These particular companies have helped many of those with bad credit records to get financing to buy a car.

The downside to getting a sub-prime loan though, is that you will definitely pay higher interest rates. The good thing however, is that they are flexible.

If you need another car in a hurry, then accept the loan at the higher rates, and then, when you are able to, refinance your car at a later stage.


Tip #4. Get a friend or family member to co-sign your application

This is one of the easiest ways to acquire a vehicle loan, no matter what type of credit record you have.

If you have a friend or member of your family that is willing to co-sign, and they have an excellent credit record, then, not only will you probably get the loan you need, but the interest rates will more than likely be lower as well.

The trick here though, is to find someone willing to take the risk of co-signing your loan.

The person co-signing will have to be convinced that you, the primary borrower, is capable of repaying the loan on a regular basis, and not suddenly stop paying, in which case, he or she will end up being responsible for the money borrowed.


Finally, remember that you are applying for this type of loan due to your bad credit record, and you are not really in a position to buy the car of your dreams.

Stay within your financial limits, and use this time as an opportunity to increase your credit record, by paying regularly, and on time. With your good repayment record, and an improved credit rating, you will be in a better position to buy a better car, next time round.


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