Although technically cleared of their obligations, discharged bankrupts can still face significant challenges when applying for motor vehicle finance. Both individuals and business operators can find it difficult to connect with lenders willing to give them a fresh start with workable rates and terms on a new car loan. Using our specialist services can provide a more efficient and streamlined way for discharged bankrupts to access the right lenders and affordable options.
As experts in all areas of personal and commercial lending, we provide post-bankruptcy car financing to open opportunities for discharged bankrupts to rebuild their credit with a workable car loan. If you’re in this position, have a confidential, no-obligation discussion about your options with one of our brokers.
A range of circumstances can lead to both individuals and businesses having to enter bankruptcy.
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After the assigned time period, bankrupts are discharged but the situation remains on their credit history for 5 years. This credit situation and the stigma attached to bankruptcy make it difficult to obtain new credit through traditional lending channels. Using services such as our expert brokers, can present workable vehicle financing options post-bankruptcy.
Bankrupts will have to wait 12 months after being discharged to apply for a car loan, and preferably prove they have taken steps to improve their credit position. A range of documentation is also required.
Acquiring car finance as a discharged bankrupt is not an impossibility. The reasons for the bankruptcy can be significant to getting approved and being offered a good rate.
While discharged bankrupts may think avoiding taking on credit is their best option, the possibility of a fresh start through responsible borrowing may lead to improving their credit report and future financing prospects.
While applying for the same loan from multiple lenders can damage a credit report, using our broker services to source the best rates from across more lenders, does not affect credit scores.
We provide lending services and products to both individuals and business entities that have been discharged from bankruptcy. To discuss your options, contact us by phone or online.
We do have lenders that will approve car loans for discharged bankrupts, subject to meeting certain criteria. A 12 month timeframe after discharge is a minimum requirement for most lenders. Lenders also like to see that since declaring bankruptcy, an individual has not acquired a poor credit history and has made moves to improve their credit position.
Lenders will also want to be assured of a resolution in the circumstances that led to the bankruptcy. Applicants will need a stable income and stable residential situation and be able to demonstrate with documentation, that they have the capacity to meet vehicle finance repayments.
Self-employed persons who are unable to provide full documentation can speak with us about Low Doc Business Vehicle Financing.
Documentation required for discharged bankrupt car loans includes:
Lenders will be individually assessing each application for car loans for discharged bankrupts. The explanation provided for the bankruptcy and steps taken since then to improve both credit and financial situation, can contribute to a better rate. Discharged bankrupts are not necessarily considered as bad credit loans. But the credit history will influence any lending offers.
Interest rates are very much based on the creditworthiness of the applicant but also the amount being borrowed compared with the value of the vehicle. A better rate may be achieved where less than the full price of the vehicle is borrowed. Applicants can look to paying a large deposit to reduce the amount required – the loan to value ratio. Where the LVR is not acceptable, the lender may request a larger deposit.
The term offered will impact the monthly repayments. While it is natural for most buyers to seek a longer term to reduce the repayments, the opposite may be more effective in the longer term for discharged bankrupts. Opting for a shorter car loan term but still with manageable repayments, may assist in building credit faster.
Purchasing a quality vehicle, preferably new, which can be used as security can contribute to a better rate than for a used vehicle. New cars typically attract better rates than used models. Providing a better starting position for discharged bankrupts. Discharged bankrupts can also consider a guarantor to assist them achieve a better rate and more workable terms.
Discharged bankrupts may consider a longer time between being discharged and applying for motor vehicle financing. While 12 months is the minimum period, a longer timeframe may provide more time for them to rebuild their credit history and establish a more stable financial position.
Our brokers will be handling the entire lending process on your behalf. We’ll be finding you the lender that best matches your profile and requirements and negotiating for the best rates, best terms and most workable outcome.
While the prospect of taking on motor vehicle finance as a discharged bankrupt may initially sound daunting and overwhelming, looking to the medium-longer term, the prospect can be a positive. Securing a car loan and diligently meeting the repayments schedule provides the ideal opportunity to rebuild the credit score and profile.
Making payments on time is reported to credit agencies and can go a long way to lifting that credit score and the opportunity for better interest rates. After building a good repayment history over the first period of a car loan term, say 12-24 months, discharged bankrupts may consider refinancing their loan to achieve a better interest rate for the remainder of the loan. This can work for some, but be mindful that the vehicle, even if purchased new, would be considered used and the relevant interest rates for second-hand vehicle would apply. Fees and charges would also apply to finalising the original loan and early and establishing the refinanced loan.
Meeting loan commitments also builds equity in the vehicle and along with an improved credit position, greater prospects for future loan applications. Start rebuilding your credit by contacting us to discuss your car loan opportunities for discharged bankrupts.
Discharged bankrupts do not have to go it alone when seeking motor vehicle financing. We’re specialists in working with car buyers in all types of circumstances to secure the most suitable, affordable car loans. Buyers appreciate the understanding nature of our brokers, the individual and personal approach and our no judgement attitude.
Having our brokers source you the best vehicle financing from across our 80+ lenders does not affect your credit history. But it does mean you have experts working in your best interests to find you the most suitable lender and the most workable solution.
Contact us for a quick quote or a confidential pre-application discussion around your individual options.
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THE COMPARISON RATE IS CALCULATED ON A SECURED LOAN OF $30,000 FIXED FOR A TERM OF 5 YEARS, NEW GOODS, EFFECTIVE 20/09/2024 AND SUBJECT TO CHANGE. WARNING: THE COMPARISON RATE IS TRUE ONLY FOR THE EXAMPLES GIVEN AND MAY NOT INCLUDE ALL FEES AND CHARGES. DIFFERENT TERMS, FEES OR OTHER LOAN AMOUNTS MAY RESULT IN A DIFFERENT COMPARISON RATE.
Technically, bad credit loans and loans for discharged bankrupts may be viewed differently. But discharged bankrupts may be considered as high credit risk applicants by lenders, depending on how they have rebuilt their situation since bankruptcy.
Interest rates on all car loans are subject to individual assessments by lenders. Discharged bankrupts may be viewed as high risk and attract higher rates. If a discharged bankrupt can prove they have resolved previous issues, they may be offered a better rate.
When approved for a car loan, discharged bankrupts can select from Personal Secured Car Loan or the selection of commercial credit products.
Discharged bankrupts must wait a minimum 12 months after being discharged in order to be eligible to apply for car finance.
Discharged bankrupts will be required to provide 6 months’ worth of bank statements and payslips, details and debts and assets and proof they have resolved their bankruptcy issues.
Discharged bankrupt business owners when approved can select from Chattel Mortgage, Leasing and Hire Purchase for vehicle financing.
Select, specialist lenders will approve personal car loans for discharged bankrupts.
Paying a higher deposit to reduce the loan to value ratio may contribute to a better rate on a car loan for a discharged bankrupt. Using a broker can assist in sourcing the best offer from across many lenders without impacting the credit score.
Many lenders will take into account the reasons for the bankruptcy when assessing car loan applications from discharged bankrupts.
Discharged bankrupts may consider meeting repayments over the first 1-2 years of a car loan and then applying for refinancing at a lower rate. Showing a good payment history can contribute to a better rate. But the lender fees and charges associated with paying out the initial loan early and refinancing should be considered.
