Getting an auto loan with poor credit can be a daunting prospect in New Zealand. Banks and other traditional financial institutions often reject applications from people with less than perfect credit histories. Fortunately, there are still a number of ways to get an auto loan with poor credit in NZ.
In this comprehensive guide, we’ll look at the different ways to get an auto loan with poor credit in NZ and the steps you need to take to ensure you get the best deal possible. We’ll also discuss some of the key considerations to bear in mind when applying for an auto loan with poor credit.
1. Understand Your Credit Rating
The first step in getting an auto loan with poor credit in NZ is to understand your credit rating. Your credit rating is a numerical score that reflects your creditworthiness. It is calculated by credit reporting agencies such as Equifax, who use a range of data to assess your financial history and ability to repay a loan.
A poor credit rating can be caused by a number of factors, such as missed payments or a history of defaults. It’s important to understand why you have a bad credit rating so that you can take steps to improve it.
2. Shop Around for the Best Deal
Once you understand your credit rating, it’s time to start shopping around for the best deal. It’s important to compare the different options available to you, as this will help you find the best value auto loan with poor credit in NZ.
When comparing auto loans, it’s important to look at the interest rate and other fees and charges. It’s also important to look at the repayment terms, as this will affect how much you’ll have to pay each month.
3. Consider a Secured Loan
If you’re struggling to get an auto loan with poor credit in NZ, one option is to consider a secured loan. A secured loan is one where you put up an asset as collateral, such as your home or car. This means that if you fail to make the repayments, the lender can take possession of the asset.
Secured loans are often easier to get than unsecured loans, as the lender has more security. However, it’s important to be aware of the risks associated with secured loans, as you could lose your property if you don’t make the repayments.
4. Look for Non-Traditional Lenders
If you’re still struggling to get an auto loan with poor credit in NZ, you should consider looking for non-traditional lenders. These lenders often specialise in providing loans to people with bad credit and may be more willing to take a chance on you.
Non-traditional lenders may also offer more flexible repayment terms and lower interest rates, which can make them a more attractive option than traditional lenders. However, it’s important to be aware that these lenders may also charge higher fees and charges.
5. Consider a Co-Signer
If you’re struggling to get an auto loan with poor credit in NZ, another option is to consider getting a co-signer. A co-signer is someone who agrees to take responsibility for the loan if you fail to make the repayments. This can help you get an auto loan with poor credit, as the lender will have more security.
However, it’s important to be aware that a co-signer is taking a big risk. If you fail to make the repayments, the co-signer will be liable for the debt. It’s therefore important to make sure that you can make the repayments before you take out a loan with a co-signer.
Getting an auto loan with poor credit in NZ can be a challenge, but there are still a number of options available. By understanding your credit rating, shopping around for the best deal, considering a secured loan, looking for non-traditional lenders and considering a co-signer, you’ll be able to get the best auto loan with poor credit in NZ.