Bad Credit Car Loan Tips

1. Determine your budget

There is more to the cost of a car than just the initial purchase price – it is important to remember you’ll need to pay stamp duty, insurance and potentially registration costs up front with your bad credit car loan.  In addition, it’s important to get a car history report when you’re considering a particular vehicle – these add an extra cost and if it shows something that’s a deal breaker, you’ll have to get another one on the next car you’re interested in.

Running costs and maintenance are also aspects you’ll need to think about when choosing a car.  Certain brands may be more expensive to service or purchase parts for than others, which can increase the cost in the long run.

You can also think about whether you want to purchase your used car privately or through a dealer.  Private sales are often cheaper, but dealers tend to offer some form of warranty, which can be a bonus, plus you can sometimes trade your old vehicle in.

2. Know your needs

When finances are tight, you may not be able to find a car that ticks all of the boxes on your wishlist.  It’s important to prioritise what you really need, to make sure you get a vehicle that’s suitable for you and your requirements.

What you prioritise will depend on your situation – maybe you have little kids and need a car that can fit three carseats in the back.  Or maybe you need plenty of boot space, or just care about fuel efficiency.  If you figure out which features are non-negotiable it makes it easier to see what really matters and what you can afford to be flexible on.

3. Check the car’s history

Fun fact about buying a used car – if it was purchased with a secured loan and the old owner defaults on their payments it can be repossessed – even if you, the new owner, have purchased it and have nothing to do with that loan.  Yikes!

That’s why it’s so important to get a Personal Property Securities Register (PPSR) check  before you buy – it’s one thing to take out a bad credit car loan to finance your purchase, it’s quite another to be held responsible for someone else’s loan!

4. Take it for a test drive

It’s time to take the car for a test drive!

When taking the car out, it’s good to try it out in as many different ways as you can – think different speeds and different road surfaces.  Try out the handbrake, test all the lights and windscreen wipers.  Check you can get into all the gears and aren’t having issues with the clutch.

And make sure the car will work for you – if you are tall, make sure you can sit comfortably upright without hitting your head on the ceiling.  Check those car seats will actually fit in the back seat.

Cars are not cheap – make sure you’re hitting those priority points we talked about. And make that bad credit car loan work for you.