Do you know what your current credit rating is? If not you may want to find out, especially if you’re in the market for a new set of wheels, because according to MyCRA Lawyers, more and more Aussies looking to take out a car loan are being rejected due to a poor credit rating.
In fact, CEO Graham Doessel reported that Aussie car sales in the new year are the lowest they have been in eight years, which is likely a result of stricter borrowing regulations enforced after the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Of course while that may be true, it doesn’t mean that you can’t take steps to protect your credit rating and make sure you keep your eligibility for a car loan intact.
What can you do to keep your credit rating healthy?
If you know you have a car purchase coming up - whether it’s buying your first set of wheels or trading in a car that’s on its last legs - a little preparation can go a long way. Making sure you’ve got your credit in order can help you avoid being one of those Aussies rejected when it comes to the crunch.
You can access a free copy of your credit report once every year from the major credit reporting bodies in Australia. So first things first, get hold of your report and check there aren’t any errors and that everything is up to date.
If you’ve discovered your credit score has seen better days, it’s time to start repairing it. To do this, you can:
- Make sure you pay all your bills or even fines on time, as late repayments are recorded on your credit report. You could even set up a direct debit where possible, so that you don’t have to worry about penciling due dates into your calendar.
- Cut down on the number of credit sources you have access to. Having a high overall credit limit available to you can damage your chances of getting a new loan, so if you’ve got old credit card accounts you don’t use, it’s time to close them down.
Find the right car loan for your needs
After spending some time getting your credit score in order, the next step is finding the right car loan to apply for. There are a few things to keep in mind when choosing a car loan, especially if your credit history is still recovering:
- Some lenders will offer you an interest rate that depends partly on your credit - the lower your credit score, the higher the interest rate you get. So be aware of this when you compare car loans, and look for one that will be a good deal for your situation.
- If your credit history was damaged because you sometimes struggle to make repayments, consider taking out a longer loan. All other things being equal, spreading repayments out over a longer loan term will ultimately cost you a little extra in interest, but will mean lower monthly repayments, which can help you stay on top of them.
- Secured car loans are more common, and generally have lower rates than unsecured loans. Most will use the car you’re purchasing as collateral, so it’s worth considering a secured loan to snag a lower rate.
Ready to start? Head over to compare car loans or get started with what’s on offer below. You’ll be putting the keys in the ignition and rocking out to R. Kelly before you know it!
Compare secured car loans - last updated November 21, 2020
New Car Loan
- Heritage BankHeritage Bank
Refinance Car Loan
Secured Car Loan
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