In today’s tough economic environment, more and more people find themselves wondering how to finance a car if blacklisted. The good news is that even if you are on the dreaded blacklist, there are options out there to get you driving away in the wheels you want.
What does it mean to be blacklisted?
In today’s harsh economic climate, one in four South Africans is blacklisted, so you are not alone. You find yourself on the blacklist when you have a poor credit record caused by defaulting on debt payments and late payment of debt.
All of your credit transactions are recorded on your credit record, from credit cards to cellphone contracts, home loans, retail store accounts and any other credit buys. Neglecting to pay any of these dues gives you a bad credit record that could put you on the blacklisted. As a blacklisted person, you are seen as a bad credit holder and a risk to lenders. This means that loans are harder to come by and you will have to pay higher interest rates on money you borrow.
Learning how to finance a car if blacklisted
Luckily there are ways of getting car finance even if you are blacklisted. The best advice is to explore all the options fully and apply them to your situation so that you can decide which is the best for you. If you find yourself denied an application by the first place you try, don’t lose heart. Keep trying different institutions and you are sure to find an institution that will lend a hand (and lend some money!). Because you are blacklisted, expect to pay higher interest rates as you are a higher risk customer. This makes it especially important for you to shop around and find the best deal on interest rates.
- In house finance from car dealers
Some car dealerships offer their own car financing programs, especially if you are looking to buy a later model vehicle.
- Rent to own
Rent to own programs allow you to drive a vehicle, essentially “renting” the vehicle with affordable monthly payments until the rental period is over and the car is transferred into your name. Even though you are renting to car, you will still experience benefits such as extended warranties and a fully examined and inspected car.
- Bond or home loan
If you have enough equity tied up in your home, you can choose to take out a second mortgage or home owner’s loan to draw some of the money from your home to use as you please. In this case, it would mean getting money to buy a car. This is a good option as the loan is relatively easy to obtain and the interest rates on this kind of loan are lower than those of car finance companies.
- Apply online
There are a number on companies which offer car insurance to blacklisted car buyers. Conduct a simple online search to find a list of companies who will help you out with car finance if you have a poor credit record. You can apply for car finance online, so have the information you need with you. After you have filled out the application form, the company will contact you with a quote if they accept to lend you money for a car.
What you should do before applying for a vehicle loan
If you don’t need a new car immediately, a good idea is to save up as much money as you can before you finance the car. With some money to put down as a deposit, you will have less money owing to the lending company and less interest to pay. Showing that you have saved up will also show the lender that you are able to manage your money and lessens to idea of you as a risk.
Being on the blacklist is not permanent, and you can work your way back to financial freedom by paying your debts on time and improving your credit score slowly but surely. If you are awarded car finance while blacklisted, it is imperative to pay your dues on time.