Why a bad credit rating won't stop you getting a car loan
"BAD things happen to good people."
That's the understanding from Savvy CEO Bill Tsouvalas who says a bad credit rating is not the be-all and end-all for those seeking a car loan.
With 1.9million Australians at risk of financial default this year, according to credit agency Veda, Mr Tsouvalas said many people would be turned away from financiers for having a tainted credit score.
"If a borrower has had issues with their credit - whether it was a business that failed or if they moved house and the Telco company was still sending bills to an old address so they weren't paid and it went into default - some financiers would deem them too 'high risk'," he said.
"That's where brokers and financiers like Savvy step in to give that person a chance."
So how do you go about getting car loan when your report card isn't covered in gold stars?
"One great way to get prepared is to pay back the default, or have a payment arrangement in place and be paying it off," Mr Tsouvalas said.
"Secondly, come to a broker like Savvy, and get approved for a car loan with bad credit and continue to pay it back. This will build up your credit history.
"Consumers should really look at it as a short term option; having a bad credit car loan for two to three years, then once you display good repayment history, you can come back to your financier or broker and look at refinancing it to get a much better interest rate."
Mr Tsouvalas said the main differences between a regular and a bad credit car loan was the latter had a higher interest rate and a slightly longer approval process.
"We just require a bit more information (like three months' worth of bank statements) and there are some restrictions on the amount of money allowed to be borrowed, the type of vehicle and where it is purchased. Otherwise it's pretty much the same," he said.
Mr Tsouvalas's words of advice to those seeking finance was to not give up hope.
"There are financiers and brokers out there that can assist you and who are prepared to look outside of the box and understand that bad things do happen to good people," he said.
"Some circumstances are out of your control, but there are institutions out there willing to give people a chance."