How to Refinance a Car Loan with Bad Credit in Australia

This article will give you all you need to know about how to refinance a car loan with bad credit in Australia, tips on getting your bad credit loan approved, and places to refinance your car loan with bad credit.

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Bad credit is a person’s inability to pay bills on time and the likelihood of failing to make future payments. It is reflected in a FICO score of 579 or lower.

A credit score is a single number that summarizes credit history, and lenders use it to price loans.

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A credit score is calculated based on your credit report and includes how much money you have borrowed, whether you have paid your debts on time and how many credit applications you have made. 

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A credit score affects the interest rate lenders charge because it determines how risky a loan is. Typically, the higher the score, the better the rate. 

refinance a car loan with bad credit in Australia
Photo credit: The Auto Warehouse

How to Refinance a Car Loan with Bad Credit in Australia 

Once your options have been weighed, and you have decided that refinancing your car loan is the way to go, that is where Drive comes in. 

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Contact your existing leader first; you must contact your current lender to determine the pay-off amount.

This figure is needed to tell lenders how much your loan costs so they can set your rate and approve the new loan. 

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You will also want to determine if any break fees, exit fees, or other charges will occur. If you don’t have a long time, it’s essential to consider whether paying these costs is worth it.

However, if you still have some years left, it might be worth spending a few extra fees to secure a lower interest rate and end up paying less overall. 

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#1. Compare Your Car Finance Options with Drive.

Now that you are ready to compare loan options, Driva’s innovative refinancing platform is here to guide you.

All you must do is tell them a few details about yourself, your car, and your existing loan, and the platform will instantly provide you with personalized quotes from their panel of over 30 lenders.

You will provide them with the original loan balance and term and age of the car so that they can give you personalized rates. 

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#2. Apply for Car Loan Refinance

Once you’ve decided on the lender you want to go with, the platform will need a few documents from you before they can progress your application.

The only documents you need are your driver’s license and your 2 most recent payslips. You will also need to provide some bank statements, but you can retrieve these digitally at bankstatements.com.au. 

Before your profile is shared with your chosen lender, the platform ensures you’re likely to be approved, preventing disappointment and protecting your credit score. 

#3. Get Approved

After your application has been submitted to the lender, the approval process generally takes two hours and two days, depending on the lender. 

Once your application has been approved, your new lender will transfer the funds to your old lender directly, and you can then start making your regular loan repayments to your new lender and enjoy the savings!

5 Tips to Bad Credit Card Loans with Guaranteed Approval in Australia 

Below is the tips to bad credit card loans with guaranteed approval in Australia:

#1. Compare Free Quotes and Get Many Options

There are many bad credit car loan companies online that offer free quotes that can give you an idea or insight into how much a car loan would cost you.

Free quotes can also give you a better idea of how to gauge each of the quotes you receive and pick one that is best suitable for your needs and budget.

#2. Choose Shorter Loan Terms.

Shorter loan terms give you lower interest rates, both in a bad credit car loan and a regular car loan. The faster you pay your approved bad credit car loan, the faster your credit is built.

However, you should be able to estimate if your earnings during this period are enough to repay a loan while paying for other financial necessities. The lender will also check the possibility of you being able to fulfill a shorter loan.

#3. Check your Credit Report.

Your credit report does not play a vital role in getting your bad credit car loan approved; it is still a financial document accessed by non-conforming lenders to determine/consider your capacity to repay car finance.

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Checking your credit report allows you to discard items that should not be in your credit report anymore.

Due to payments and other financial duties, you should be paying on time – improve and build your credit history.

#4. Reduce Credit Debts

Reducing credit debts also increase the chances of getting a guaranteed bad credit car loan approval. In the event of loan approval, you will need to pay for your monthly car amortization, expenses, and other financial obligations. 

#5. Refrain from Applying Several Times

Limiting your number of applications for a car loan would be best. Credit queries are posted on your credit history.

The more attempts you make, the less likely you’ll get guaranteed approval. Review your credit history thoroughly and improve the areas that need improvement before applying.

Suppose default or bankruptcy is due to be removed from your credit report. In that case, it is advisable to wait for the item to be discarded before proceeding with a wrong credit application.

Recommended:

10 Best Construction Loans in Australia & How to Get Them

How To Refinance Home Loan In Australia

10 Best Personal Loans with Low-Interest Rates in the USA

How to Apply for a Personal Loan With Bad Credit

5 Best Places to Refinance a Car Loan with Bad Credit 

  • My Autoloan
  • RoadLoans
  • Auto Credit Express
  • Capital One Refinance
  • OpenRoad Lending

Refinancing is an essential tool for consumers looking to get a better deal than the one they have on their existing car loan.

Whether you’re looking for a loan with flexible repayment terms or a lower rate, the Drive platform can help.

Once you’ve concluded that refinancing is the right move, use Driva’s innovative refinancing platform or any other platform of your choice.

FAQ

What do Lenders Look for When Refinancing a Car?

Lenders look at the value of your vehicle relative to how much you owe on loan or the LTV (loan-to-value) ratio. A higher loan-to-value can make it harder to get approved, especially if your LTV is over 100% and your car is worth less than the LTV

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What is the Minimum Amount to Refinance a Car?

You can refinance your car immediately after buying and even before you make your first monthly payment

What is the Lowest Credit Score you can have to Refinance?

Technically, no minimum credit score is expected to refinance your car, and your score is one of the multiple factors lenders reviews as part of the application. 

What will my Interest Rate be with a 500 Credit Score?

People with credit scores of 500 or lesser received an average rate of 20.67% for used-car loans and 13.97% for new-car loans in the second quarter of 2020; this report is according to the Experian State of the Automotive Finance Market. 

How Much of a Car Loan Can I Get with a 620 Credit Score?

The types of programs available to borrowers with a 620-credit score are USDA loans, jumbo loans, conventional loans, FHA loans, VA loans, and non-prime loans. With a 620 score, you may be eligible for different mortgage programs.

Can I Refinance my Car with a 620 Credit Score?

There’s no universal minimum credit score for refinancing your car loan. Different lenders have different requirements, and some specialize in working with people with bad credit, including those with repossessions or bankruptcies in their credit histories.

Can I Refinance an Existing Car Loan?

Refinancing a car loan helps you save money by lowering your interest rate. The process involves replacing your current car loan with a new one, typically with a different lender. Your car will act as collateral on your new car loan, just as it did on the original car loan. 

Watch the video below to know how to refinance a car loan with bad credit in Australia: 

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