How do you get a car when you’re blacklisted?
Despite preexisting credit issues, it is still possible to purchase a vehicle if that’s what you need. Unfortunately, banks and traditional lenders may reject potential borrowers with judgements or payment defaults on their records.
Additionally, they may also impose exceedingly high interest rates should they approve the loan. Therefore, it is important to understand your rights and take actionable steps to clean up your credit report so that you can qualify for a loan or get better interest rates. In any case, this blog explores how to obtain financing for a car even with imperfect credit.
How do you improve your creditworthiness?
When someone is blacklisted, their name or information appears on a ‘bad record’ that is regularly monitored by financial institutions. Depending on the severity of the record, this can result in difficulties when attempting to gain credit or being offered higher interest rates. The first step anyone in this situation should take is “clearing their name” and getting off the blacklist.
This can unfortunately be neither an easy nor straightforward process and should always be accompanied by the right measures and resources. There are three stages of blacklisting; each corresponds to different levels of financial security and future economic prospects. It is important to understand which stage you are at so that you are better able to make informed decisions about how you can improve your circumstances.
Have you missed payments?
Settlement of debt with your creditor is the first step towards repairing your credit score, and if no legal action has been taken yet, then you should still have some breathing room.
However, even after compensating for what you owe, lenders may still view you as a high-risk client, and you will be left with a still-low credit rating, meaning that loans offered to you are likely to come at higher interest rates. It is important to educate yourself on different loan options so that you can find the ones that best fit your budgeting needs when faced with bad credit situations like this.
There is hope in getting a car with bad credit. However, it requires carefully researching which options work best through careful deliberation of all available alternatives.
Has there been any legal action taken against you?
Taking legal action against you is an indicator of a lack of trust, and for that reason, it can be difficult to get credit from loan providers.
Even if you have managed to pay back any outstanding debts, there is a very slim chance of getting approved for a loan. In this case, the only solutions are to finance the car using the three alternative options, such as peer-to-peer lenders, rent-to-own companies, or borrowing someone else’s money.
Each route has its peculiarities, so you should assess your financial situation carefully and evaluate a financing option that is suitable for both your current budget and future prospects.
Are you in payment default?
If your credit provider has handed your debt over to attorneys, you may be in payment default, which will be reflected on your credit report for up to 2 years. In this situation, it’s important to correctly identify where the debt is currently. If it is still with the original credit provider, you can attempt to directly repay and settle the debt.
However, if a debt collection agency is involved, you should always pay them directly rather than through your credit provider. While you may eventually be able to apply for a vehicle loan again, understand that lenders might consider this a high-risk transaction due to the financial history associated with it.
What are your vehicle financing options if you are blacklisted?
Applying for a vehicle loan with a poor financial history can be daunting. Fortunately, those who have been blacklisted don’t need to worry much. There are dealers that specialise in aligning clients with reasonable financing solutions.
Such firms will listen to your individual circumstances and work out a solution particularly tailored to your needs. It could be car finance through a less traditional lender or a rent-to-own or rent-to-buy agreement. So if you’re blacklisted but looking for car financing, don’t despair! With a little research and an open mind, you can soon find yourself in the driver’s seat of your dream ride.
In house-finance
In-house financing is a popular option for customers who need to purchase something quickly and cannot wait for the long bank processing times. The benefit of in-house financing is that immediate loans are available, as well as an improved credit score for customers after the loan is successfully completed.
It should be noted, though, that this type of financing often carries a higher interest rate than with traditional lending institutions, as sellers have more control over the rates. Prospective customers should weigh all of their options before deciding what type of loan is best suited to their needs.
Rent-to-buy
Rent-to-buy is an excellent option for someone who is blacklisted and can’t get vehicle finance through a bank. It allows you to drive a car of your own without having to qualify for loan approval. Once the rent-to-buy contract has been finalised, all that is needed is a valid driver’s license and proof of income.
Depending on your preferences, contracts can typically range from 24 to 60 months, and the initial deposit, usually due along with the first month’s payment, may be waived altogether in some cases. With plenty of rent-to-buy dealerships all over South Africa, anyone who is blacklisted can have access to a reliable form of vehicle ownership quickly and easily.
Buying a car in cash
Buying a car in cash is an option if you’ve been blacklisted, as it eliminates the need to take out a loan, credit interest, and other costs. It may be difficult, however, to produce a large amount of cash up front. It is possible to wait and save up the necessary funds with your own resources or those of friends and family.
Alternatively, used cars may provide more affordable prices but require an inspection of the vehicle’s condition as well as dealing with sellers who could be questionable. Finding a suitable car, however, does provide a viable way for those blacklisted to still find reliable transportation.
Rent-to-own
Rent-to-own offers a great opportunity for those who may not otherwise be able to purchase a car. No matter the credit score, or even if it is the first car you own – we can make sure you hit the roads in the vehicle of your choice.
Through rent-to-own, you will pay monthly installments that, when finished, give you full ownership of your car. Additionally, this arrangement gives you an excellent chance to improve your credit score and obtain an even better deal on a potential future purchase. If you’re seeking an affordable way to enter into driving for yourself, consider renting to own as a viable option!
Key Takeaway
Being blacklisted doesn’t have to prevent you from owning a car. Explore alternative financing options like rent-to-own, in-house financing, or saving to buy in cash. By understanding your financial situation and making informed choices, you can still find a reliable vehicle and work towards improving your credit for a brighter automotive future.