People who are low-income earners still need to move around, and a car can come in handy in that regard? Does being on benefits mean that you should give up on the possibility of buying a car? Even if your finance options are different, you still likely need a car as much as the next person, so what is your best option?
Well, you need to acknowledge what your position is before you start thinking about car finance. Your credit is likely not the best, for example. You may have had loans or credit card debt in the past seven years that were not handled well and, being on benefits puts a damper on your credit score, which means that getting a car loan is no easy feat.
Luckily, there's a host of information below to help you navigate finance options, loan requirements, and potential credit history concerns that may weigh on your mind as you opt to get a car.
How Do Finance Lenders See Beneficiaries?
You may think that Pty Ltd, publicly traded, and other loan agencies turn up their noses at the thought of granting a vehicle loan to such low-income earners. However, not all finance lenders take the same approach. There's no denying that some alternatives, such as banks, like to lend to those with more money and those who have a better credit history. After all, these people are theoretically more likely to be able to keep up with whatever payments and interest the loan agreement dictates.
Nevertheless, there are excellent options in Perth that can help typical high-risk borrowers to access the money they need to purchase a vehicle. You might fall into the category of benefit recipients who have a good credit history. If so, use it to your advantage, as you can get perks, such as better interest rates and more favourable payment terms.
Australian credit agencies typically provide loan agencies with information on your credit situation upon request, but there is a shortfall. While you may not be able to come up with all the cash to buy a car outright, your credit score doesn't reflect your whole financial situation. So, while many loan finance establishments use this information to gauge your ability to pay your loan that way, they don't know how well you can handle the cost.
Loan agencies that appeal to those who offer personal loan options to those on benefits tend to give you a chance to prove your ability to pay off a car loan. An affordability check allows them to find out this information accurately.
A lender's main concern is that you can cover the costs that the terms and conditions of the loan dictate. This confirmation acts like an insurance policy (though they have a real insurance policy if all else fails).
Whether you're looking to borrow money for vehicles, equipment, or any other reason, you must present an accurate picture of your finances. If a finance lender thinks or manages to find out that you might be lying, you'd best take your business elsewhere as they are not going to be too keen to help you with your equipment or car loan woes.
How does the Car Finance Process Differ for Benefit Recipients?
Technically speaking, the process of acquiring loans for cars, equipment, etc. isn't different when you compare it to the one others go through. You borrow a loan; you state your reason (debt consolidation, equipment, vehicle), you get the cash, then you pay the principal and the interest. What differs is how these concepts are used differently.
Benefit recipients don't typically get to borrow the same amount of money as someone who isn't. Additionally, the interest levied and the amount for repayments are also usually different.
Whether you plan to buy or lease a piece of equipment, a new car, a used car, a piece of furniture, etc., lenders are concerned with repayments. If you can make all your payments, then they have nothing to worry about. The problem is that they don't know how your tax benefits, low income, etc., and everything else feeds into your ability to handle loan repayments. Therefore, a loan business must make sure to protect itself by establishing payment terms that mitigate the risk as much as possible.
Unfortunately, this means that the rate of interest and the amount to pay monthly can be excessive for benefit recipients. Even if the interest is fixed, when you compare it to a standard rate, you may find that there's a gross difference. Such a thing can make you wonder if trying to get a car loan is worth the trouble since you may not be able to pay the cash back.
Westside Auto can provide you with the best payment terms you can find in Perth. Remember, once you have the car, you are going to be dealing with maintenance, equipment, and insurance costs, which might be too much to handle if you have to pay a lump sum every month to a financial institution.
Essential Considerations You Need to Know
Even if you have bad credit, buying a car is impossible. There are many financial institutions that you can get car loans from. However, some lenders may make things harder for you because of their ridiculous rates and other terms, But At Westside we try to get finance done for all that apply. Here are some things to look out for before you sign the document to get the money for your future car.
Unnecessary Application Fees
Some online lenders associate a cost with their application process, and you should never use them. Whether it's a personal loan, an equipment loan, or a car loan, it's never guaranteed. That goes double if you survive on tax benefits, disability benefits, etc. Even if you're told whatever money you pay is refundable, don't buy into it.
Super High-interest Rate
So, you have a tax benefit, you have a little extra money, and you want to purchase a new car. Well, it may be a used car, but it's new to you. You make some time and check out some cars. After finding some good options for hire purchase or lease, all you need is some cash. Your next step is to Google "Car loan in Perth for people with benefits." You get tons of results, and everyone is more than happy to help you with a personal loan to pay for your vehicle.
However, you should probably avoid all these financial businesses as you contemplate buying a new car. Loans with fixed rates of 10 to 20 per cent are acceptable. While you may not notice at the onset, many of the financial institutions that pop up in the search results have some rates you wouldn't believe. Imagine being on tax or disability benefits with low income and bad credit, only to have a 500% interest rate to deal with. A dishonourable loan finance business might have such crazy interest rates, which make the payments nearly impossible at times. Imagine the balloon payment you have to make at the end of one of those loans if you make it.
Make sure your review and get clarification on all terms before you commit to anything. You need to be able to walk away if you're not going to finance your car with one of these companies.
Super Low-interest Rate
There's a good chance you didn't expect to see this here. Some finance options advertise low or no-interest loans. If you see this while trying to go through the car buying process, make sure you find out the actual purchase price of the car. A lot of the financial institutions that win you over with these illusory rates bundle the costs into the price of the car.
Use your time to shop around before you purchase anything. Car finance is available from many alternatives in Perth. Some may even provide a stellar personal loan that you can use for buying your car or getting it on a lease.
Money Guarantees
There is no such thing as a guaranteed loan. Personal finance lenders sometimes sell the idea of a guaranteed car loan. Buying a car is always a process when loans are in the picture. Your documentation must be reviewed, and your credit history needs to be evaluated. The lender needs to know that you can afford to pay off the loan. How are you going to make payments effectively when you have business with other creditors? Credit card bills, existing loans, hire purchase agreements, etc. all matter. A personal finance business can't predict that all is going to be well, and you are going to get the cash.
Make sure that you steer clear of companies, such as this one, as they are generally reckless and opportunistic. The pre-approval may come easy, but your monthly payments may end up presenting a new challenge. That cash that should be used for adequate car maintenance now ends up wrapped into buying the vehicle.
Pay-as-you-go Finance
Almost anyone who has credit issues that affect the chances of getting a car loan can use this option to buy a car. It's technically a hire purchase agreement. Instead of getting a lump sum to buy the vehicle, the lender is the one who is going to pay for the vehicle. You then make the required payments until the lease has come to its end.
The car loan provider normally has a failsafe to ensure that you make the payments associated with the lease. The vehicle is typically outfitted with a device that connects to the computer of the car. It gives the car finance provider location information and allows it to immobilise the vehicle.
It may sound a bit much, but it's a pretty reliable method for buying a car on benefits. The interest rates are what you typically expect from hire purchase. The payments are streamlined, and getting a used car is possible.
Final Remarks
Car finance payments on benefits can be hard to make, but if you find the right lender, you should be able to pay your way through reliably. You need to remember that while some of the lenders in Perth are looking out for the less fortunate, others want to lock you in a cycle of impossible payments.
Borrow within your comfort zone, so you can handle the payments afterwards. Also, if it sounds too good to be true, it probably is. Find out more about car finance through Westside Auto today.
