Loan for bad credit history people

Hi all,

I'm looking for a short term loan around $3000 to help paying my bills. Is there any loan company deal with people have bad credit history. (got 1-2 defaults marked on my credit file).

Thanks

Comments

  • +5 votes

    Sorry but I can't see how anyone would want to touch this. If you can't pay your bills now, why will you be able to pay them later, and pay off the $3000 loan? Anyone that would offer you the money would be at loan shark rates.

    • +3 votes

      Been struggling due to quitting my previous job, some bills fell behind. I got a new job now, i just wanna pay them off so those collection guys wont list those bills as default on my file.

      Beside, i want to fix my credit rating too.

  •  

    http://www.fairloans.org.au/

    just found this, i may give it a go later today.

  • +7 votes

    Have you tried negotiating with the companies directly? If it's for services, they usually indicate you can discuss a payment plan with them. Not sure how you'll go though. Those pay day/short term loan places are terrible and often have effective interest rates of like 500%.

    •  

      I had bad experience with that method before. Called Vodafone, and have repayment plan going with them, 3 months later found out they have listed it as default on my credit file. I filed a complain and paid it off, all they can do was having Veda to update it as paid default.

      Update: just called Fair Loans, they say on $3000 the total amount of paying back is $3600 over 12 months. Not sure if there is any company having better rate. Advise?

      • +2 votes

        Assuming you are paying $300 per month this is 35% interest. To me that is huge, but I guess it depends on your situation.

        •  

          it is high when we put it on %. I'm still looking around though.

        • +2 votes

          3000 x 1.35 = 4050
          3000 x 1.2 = 3600
          I don't know where you got 35% interest from, that's 20%.

        • +3 votes

          Fine if you aren't repaying for the full 12 months, but they expect you to pay as you go. Given this in simple terms the average loan over 12 months is only 1500, which gives you 40% interest.

          In reality because of the compound effect it is only 35%. See below (or just look up compound interest) for the formula.

        •  

          No that is not correct.
          "Bruce" is correct, its 35%. What you are talking about is simple interest. Loans are reducible interest and are calculated as such.

        • -2 votes

          Yes but the 35% includes the principal amount as well. It's not the "effective interest rate".

          When banks quote interest rates on lending, they refer to the "interest" only.

          If simple interest is 20% then effective yearly is 21.9% for monthly payments. Formula is (1+20%/12)^12 = 21.9% with a monthly effective rate of 1.8%

        •  

          agree with voolish, 20% simple interest straight line! not bad, given you get money in such a need, and then, many credit cards now charge this rate anyways.

        • +3 votes

          Yes but the 35% includes the principal amount as well. It's not the "effective interest rate".

          When banks quote interest rates on lending, they refer to the "interest" only.

          If simple interest is 20% then effective yearly is 21.9% for monthly payments. Formula is (1+20%/12)^12 = 21.9% with a monthly effective rate of 1.8%

          Sorry, this is just wrong. How can interest exist without being on the princible? If you only charge interest on the interest there would never be any in the first place!

          Your formula is for converting (approximately) compounded interest to a single yearly application. If you were to use this argument then you have it in reverse anyway, you would get:

          (1+?/12)^12 = 20%

          and the result is 18.4% interest.

          This is still wrong though becuase you don't have access to the 3K for the the year, you can only access the full 3K for one month.

          No banks try to claim loans are half the interest rate, but you have to pay on the initial amount regardless of what you have paid off.

          And here it is in full with 35% pa (2.92 pm):

          Month Loan Interest Repay
          1 3000 87.5 300
          2 2787.5 81.30208333 300
          3 2568.802083 74.9233941 300
          4 2343.725477 68.35865976 300
          5 2112.084137 61.602454 300
          6 1873.686591 54.64919224 300
          7 1628.335783 47.49312702 300
          8 1375.82891 40.12834322 300
          9 1115.957254 32.54875323 300
          10 848.5060069 24.74809187 300
          11 573.2540988 16.71991121 300
          12 289.97401 8.457575291 300
          Total 598.43 3600

          To help explain the difference, if I didn't have to pay it off untill the end of the year I could sit the money in a bank account, which would earn me interest (or use it to pay bills, or whatever).

        •  

          I think we should just use straight line as a guideline as 35% doesn't tell much for a normal person. And its much easier to evaluate properly by saying its 20%.
          (well I am not a debt expert, so let me know if I am wrong)

        •  

          yes, that is what i am thinking too.

        •  

          So if he will pay $3600 all up.

          The principal is $3000.

          The 'total interest' is $598.43.

          What component is the remainder?

        •  

          I rounded to 35%, actual interest is (very slightly) higher.

          here is the same thing if sold as 20% interest:

          Month Loan Interest Repay Thoughts
          1 3000 50 300 All good
          2 2750 50 300 Doesn't seem right
          3 2500 50 300 What the hell, you are over billing me!
          4 2250 50 300 * Burns place down
        •  

          Only if you have brain damage. It's seriously not that hard - he's even done it in a nice table for you!

        •  

          that's all. no other fess, beside 99 cents transaction fee and $2.20 one off to set up direct debit on my account.

          and of course dishonor fee if i miss any repayment. Will post the contract on here soon.

  • +1 vote

    Just had a look at Nimble, not much pleasant beside they only lend out $1200 (i think they are just pay day loan company)

    https://nimble.com.au/Costs

    •  

      Nimble is a manipulator of poor people's financial situation. I have been working in personal finance industry, so know several stories about this Gold Coast company. Previously called Cash Doctors, they changed their name to Nimble in order to move away from a damaged brand image.

  • +1 vote

    Try Quick and easy finance
    Saw their ad in some professional magazines.

    MOD: Link fixed.

    •  

      it shows 404 not found

      •  

        sorry my bad…

        type qef.com.au and you will get it.

        •  

          Loan/Lease Amount (In $3000)
          Term (In Months) 12
          Weekly Payments ( 88.70 )
          Fortnightly Payments ( 178.03 )
          Monthly Payments ( 388.92 )

          Total Payment $4667.04

          For unsecured, this is higher that the Fair Loans one comparing the monthly repayment.

        •  

          Yes you are right.

        • +2 votes

          90% interest! Yay!

        •  

          No sarcasm intended. Have a nice day :)

        • -2 votes

          How on earth are you doing your calculations?

          1667.04/3000 = 56% p.a.

          As for the previous one (600/3000) = 20% p.a.

        • +3 votes

          Look up 'compound interest'. Your rates are correct only if the loan was repaid at the end of 12 months, and only applied once in the year.

          Specically I am using P = Li / (1 - (1 / (1+i)^n))

        •  

          Bruce was calculating APR

        • -3 votes

          But the principal is $3000.

          The total repayment is $3600 after 12 months.

          So the effective interest rate per annum is 20%. Key word effective.

        • +1 vote

          Sorry, this is wrong. The effective rate is only 20% if the $3600 was paid at the end of the 12 months, and it wasn't compound interest. As the amount owing goes down every month with the repayments, an interest rate of 20 would result in much less than $3600 total.

    •  

      approx 64.00% effective annual interest repayment rate for Quick and easy finance!

  • +4 votes

    Do you have any gas or electricity bills that need paying?
    Google 'EAPA'. Your local charitable organisation can arrange for it to be paid for you

  • +1 vote

    You have a bad credit rating!
    You don't have steady employment!

    Before trying to negotiate rates, I'd see if you even qualify.

    I would order a copy of my credit report, you don't seem to know if you have 1 or 2, hmmm

    As Bruce says, you will be paying higher rates as you are high risk.

    A part time job may ease the burden. (Delivering pizzas is what I did for 5 years. (on and off)

    • +1 vote

      I am doing a full time job at the moment. Just want to borrow some money so that i could get those collection guys off my back as soon as possible before they listed as default on my credit file. Beside, i want to have my credit rating back up.

      •  

        Yes I too, delivered pizzas while working fulltime.

        You are obviously outside your means.

        The choices are easy, cut your expenses or increase your revenue.

        As donga has said, your rating is shite.

        Borrowing $3000 is going to put you in more bother.

        • +2 votes

          You are obviously outside your means.

          The choices are easy, cut your expenses or increase your revenue.

          At the top of the comments he mentioned that he acquired his debts while he had little money after leaving his previous job. Now that he has a new fulltime job he is getting decent income but not fast enough to pay off his previous debts without them defaulting so he wants to take out this loan to pay off those previous debts and then repay this loan with his new job. Seems like a reasonable course of action.

  • +6 votes

    What are the bills you need paid? Gas and energy companies offer hardship payment programs. You may also be able to access a 'no interest loan scheme' for example http://goodshepherdmicrofinance.org.au/services/no-interest-....

    I would be very wary of borrowing in your situation - you'll be charged exorbitant interest and it will be even harder to get on top of your finances in the future.

    You also can't fix your credit rating by borrowing more and repaying it on time - there is no "positive credit rating" in Australia like in the US. A default stays on your file and the only way to get rid of it is time.

    As others have said - get another job or work more hours over the short term to pay off the debt if at all possible, rather than relying on a loan.

    I'm not judging because I don't know your situation, but you should go and see a free financial advisor because you obviously have some improving to do in managing your finances. See https://www.moneysmart.gov.au/managing-your-money/managing-d...

  •  

    There is a maximum a loan shark or mall loans person can charge interest in Australia or Victoria, I thought it was 25% p.a max, but someone might double check that.

    so people saying 35% or 56% interest or there abouts above - not sure how this is possible.

  • +7 votes

    Some good advice here already. My suggestions:
    1. Don't take out a loan to pay off those bills. Given your credit rating and financial situation, anyone lending you money will be doing so with very unfavourable terms for you.
    2. Visit the Salvos/Smith Family/etc. and ask for help. They will call the companies on your behalf and get extended payment periods. They also often have vouchers to pay off about $50 from phone/utilities bills (gas, elec, etc.).
    3. Make a mental note to donate some money back to that charity when you are in a better financial position.
    4. See the free financial advisor listed above. They may just agree that the plan you have is good but at least you will have peace of mind.

    Why are you so concerned about your credit rating anyway if you already can't borrow money? It might be a good thing to make all the tough financial decisions that harm your rating now rather than drawing them out and creating a long history of bad credit. Being unable to get credit cards and other bad debt for a while can be a blessing in disguise.

  • -2 votes

    I could front you $3K cash. Thing is, what would you do for it?

    • +7 votes

      This is ozbargain, where people do ungodly things like dress up like a pirate, hop in on one leg for a smoothie. For 3K, I don't think there's much they wouldn't.

  • +10 votes

    Why not get a "loan" from family or friends?
    Heck, they could charge you 10% interest rate so that you don't feel guilty. They get higher than market rate, and you get cheaper than loan shark rate. Pretty much win/win.

    The only obstacle that I can see is their trust in you and your ability to repay them back.

    Oh, and definitely delay the purchase of a car for as long as possible.
    http://www.ozbargain.com.au/node/118666

    • -5 votes

      Oh dear.

      Can't afford to pay bills, asks people which is better Corolla or Focus.

      •  

        Needed a car for work. To me buying a car so that i can maintain my job and earn income rather than pay bills and start looking for new job.

        Please think twice be4 you say something silly

        • +1 vote

          Maybe look for a $4000 car and use the other $3000 for these bills? A $4k car will still get you where you need to go and look OK.

        •  

          i bought a $3000 Echo

        •  

          Yes, you told us already 23/10/13 (14.30)
          Got insurance for it ? If its stolen, you'll still be left with the loan.

        •  

          QBE have pretty cheap comprehensive insurance if you choose not to include all the extras eg. 1 free replacement windscreen per year etc and youll be the only driver and if you do a normal amount of kms per year you fit into a cheaper bracket too, is pretty good car insurance IMO

    • +2 votes

      For me I would never loan money to family or friends expecting to get anything back.
      This is also the same advice you'd get from any financial planner.

      It is a recipe for disaster when you loan money to family or friends and want to get it back but they won't pay it back… Especially when it is a substantial amount like over $1000

      •  

        Depends on your friends and family…

        In my family, whenever anyone borrows they pay it back on time. And the few times I've had dealings with (close) friends, it's been the same.

    • +2 votes

      bought a 3 doors echo from my cousin for $3000

  • +3 votes

    The plot thickens…

  •  

    Money3 have a good rep, try em out: http://www.money3.com.au

  • +1 vote

    Just a suggestion, don't keep applying for credit/loans with organisations, esp if you already have a bad credit. The number of credit checks made to a credit reporting company remains on your file. Reports disclosing too many credit check requests received by the Veda/Dun & Bradstreet etc over a short term may show borrowing pattern and lack of success at credit applications; this will further hinder a chance of success at future credit/loan applications.
    Try to improve your credit through loans from family instead over the short term. Avoid pay day loan facilities.
    When times go tough, work harder and slim down your lifestyle expenses.

  •  

    Try these guys…

    http://societyone.com.au/

    They don't have the money to lend you, but other people who want to earn good interest from you will lend you the money. A little bit from each lender, so if you go broke everyone only loses a little bit.

    These types of loans are more popular in the US, they've only just started here.

  • +1 vote

    I got a $4000 credit card with Bank Of Melbourne (which is St George Bank, its the same thing) with no probs. You could try them. You can apply online and see how it goes. They seemed to be a bit more forgiving than the other banks.

  •  

    That's it guys. I got the $3000 with Fair Loans. 12 months term. $70/week (principle + interest + fees)

    • +5 votes

      Just FYI this is 39.3% interest.

      •  

        Well, It would take a while to get fund from EAPA, would be similar with NILs but they only lend up to $1200.

        Appreciate your advice Bruce.

      •  

        No it is not, there is an element of fees.

      •  

        Is there a link or app that has a calculator to find out the interest rate?

      •  

        Absolutely no mention of interest rates on their website at all, which is always a bad sign.

        http://www.fairloans.org.au/home

        So Bruce you worked out 39.3% calculated on the repayments? Thats pretty high. Thats like pay day loans/Cash Converters sort of prices.

        •  

          I was thinking the same way. Called them up and the guy guided me to this link which i think is a pretty good budget tool. It also included the fees.

          https://www.fairloans.org.au/budget-calculator/

          Updated: just got their contract to be signed and sent back. They asked me to call up their money mentor and have little chat about budget things before they can direct credit the money into my account which is weird but maybe no harmful (hopefully).

        • +1 vote

          They probably just want to make sure you can repay their loan ok, the rate is a bit high. I worked it out to be 35% though, rather than 39%. The NAB website (that seems to be affiliated with them) has a personal loans calculator, but it only goes up to 20% so I had to use a different site which is bad. But saying all that its only for a year and if it helps you get back on your feet then its worth it.

        • +1 vote

          And I was actually thinking once youve been in your job a bit longer like 3 months or 6 months, you could apply for a 0% balance transfer with one of the credit cards and pay the debt off early. Thats an option and then it'd only be up to 6 months youd be paying a high interest loan.

          The InfoChoice website which is reasonable has some good examples of 0% credit cards. The Bank Of Melbourne has a credit card for 0% for 12 months and the only cost for the year is the $55 annual fee. This could be a good option for you, but theres others there also. Good luck anyway :)

          http://www.infochoice.com.au/banking/credit-card/balance-tra...

        •  

          Isn't the whole point of the thread that the OP's credit history is shot?

        •  

          A lot of credit card companies will consider giving you a card if you can prove you have a steady income and also weigh up how much you earn, what your expenses are and how much youre wanting to borrow. If he can prove steady employment after being in his position for 3-6 months some banks may consider him. And whats it going to waste really? A few minutes filling out a form online with a virtual instant response. Might as well give it a go.

        • +1 vote

          I believe every credit application you make (successful or not) gets recorded on your credit history so it won't look good for the OP's record to be making too many unnecessary credit applications.

        •  

          Correct. When I tried shopping around, i made sure they don't do credit check on me until i actually submit the application and docs.

        •  

          I think they want to ensure they are practising responsible lending so that they can tick it off the checklist. That way, you can't say that they were being irresponsible by lending you the money that you can't pay back.

    •  

      Pay it off as quick as you can!

  • +4 votes

    Big pluses to you; it's hard to come on a forum full of the most stingy and ruthless bargainers and ask for advice on solving a bad credit rating.

    I'll leave you with my favourite quote for the future when you are out of debt (or a variation on it):
    Albert Einstein - "Compound interest is the most powerful force in the entire universe … He who understands it, earns it; he who doesn't, pays it."

  •  

    Get a free credit check from Veda which is Australia's biggest credit bureau ( http://www.mycreditfile.com.au/home/free-credit-file.dot ) . Review your credit file and then call them to challenge any incorrect credit information.

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