Car Loan with Defaults on Credit File [Solved and Closed]

dlakers3peat on 27/11/2017 - 22:36
Last edited 29/11/2017 - 17:22 by 2 other users

I need to get a car loan for about 35k. Problem is i have some defaults that won't come off my credit file for another 8 months. Ran into some financial trouble about 4 years ago which led to the defaults. Both my wife and I work full time and we have well over a million dollars equity in our home. We have a combined income of over 250k. I do have 3 children all under 12. Using my savings is not option. My car just crapped itself so unfortunately I cannot wait and save for it. Any sound financial advice is appreciated.

Been in new job for only 1 month. Car repairs will cost over $5k for car only worth that amount.

Don't really need 35k. But do need something reliable as I use my car for work ie visiting clients, attending work related functions etc

Financial

closed Comments

  • Randxyz123 on 27/11/2017 - 22:45
    +16

    Not a financial advisor but I’d suggest buying a cheaper car, then in 6-8 months time, start looking at new cars.

    What exactly are you asking ? I’m sure you’ll get a loan but you’ll get a terrible interest rate.

    Sounds like you can’t afford to spend $35K so maybe spend $20K instead.

  • whooah1979 on 27/11/2017 - 22:47
    +47

    we have well over a million dollars equity in our home. We have a combined income of over 250k.

    surely this is a troll.

    • dlakers3peat on 27/11/2017 - 23:16

      Not a troll. Just a got a new job a month ago so this combined income is only a recent thing.

      • Apue on 29/11/2017 - 13:41

        So you didn't learn lesson from your last default.
        Get a new car when you saved the money from the 250k income.
        It shouldn't take more than a few months to save 30k.

    • kaikor on 28/11/2017 - 12:59
      +8

      When you are on that much and can't afford a $35K car by cash?

      • picklewizard on 28/11/2017 - 14:17
        +19

        Similar equity, but with around 70k less combined income and I could (but absolutely would not) buy a car worth that tomorrow.

        You got some lessons to learn about financial management bud

    • highdealer on 28/11/2017 - 22:35
      +3

      May be his wife income is 200k+…

      • follow on 29/11/2017 - 11:10
        +4

        "I'll always remember this as the night that Michael Jordan and I combined for 70 points."

        Said after Michael Jordan scored a career high 69 points and Stacey King scored 1 point against the Cavaliers.

        • YungDaggerDick on 29/11/2017 - 17:16

          I love Stacey King especially since he's about the only thing good about the bulls this year. Markkanen is promising though.

      • Oz8argain on 29/11/2017 - 14:31

        and she's not giving him enough allowance! haha

  • PJC on 27/11/2017 - 22:50
    +2

    OP perhaps amend title to Financial.

  • bobbified on 27/11/2017 - 22:54
    +3

    we have well over a million dollars equity in our home

    Why wouldn't you be able to borrow against your home as security?

    Or ask your wife to take out the loan under her name?

    • CheapskateQueen on 27/11/2017 - 22:56
      +2

      Yeh can't see why i redraw isn't the first option

      • dlakers3peat on 27/11/2017 - 23:18

        Unfortunately my home loan has no redraw facility as its on fixed interest rate for another year.

        • eatwell365 on 27/11/2017 - 23:38
          +2

          take to mortgage broker - free consult - refinance with your home loan and add a car on the top? may not be possible because of default, what about taking to the debt specialist?

          ask yours or your wife's employer if possible to do novated lease or salary package in with a car for 12 months. Since it is more a lease not purchase, it may be possible.

        • dlakers3peat on 27/11/2017 - 23:41
          +1

          @eatwell365: i think this involves a credit check.

        • eatwell365 on 27/11/2017 - 23:46
          +2

          @dlakers3peat: basically, saying you had confirmed not possible to borrow any money except private loan.

          What about rent a car through Avis or hire car company and pay month by month? It is the same price as fixing and maintaining an old European car per annum.

        • dlakers3peat on 27/11/2017 - 23:48

          @eatwell365: ok thanks i will look into that.

        • Hellman109 on 29/11/2017 - 13:34

          Refinancing on fixed interest is normally a 1 way street to paying stupid amounts of money for no real benefit.

        • dlakers3peat on 29/11/2017 - 13:36

          @Hellman109: i fixed it because for some reason the rate was cheaper than the variable. I actaully saved $200 a month by doing this.

        • Hellman109 on 29/11/2017 - 13:50

          Oh yeah I mean cancelling a fixed interest loan is expensive. Generally being on one is cheaper.

  • holdenmg on 27/11/2017 - 22:56

    Do you still have a Home Loan and if so is a Redraw Facility a possible option…

  • spackbace on 27/11/2017 - 23:04
    +2

    Big enough deposit should help

    It's free to put in a finance application at a dealership. Why not just give it a shot and see if you can get finance and at what rate?

  • Diji1 on 27/11/2017 - 23:12
    +2

    Lease.

  • p1 ama on 27/11/2017 - 23:12
    +30

    I need to get a car loan for about 35k.

    Usually needing to borrow to buy a car means that you should be buying a cheaper car.

    • dlakers3peat on 27/11/2017 - 23:21
      +1

      The affordability of the loan is not the problem. The problem is with my defaults i would not be able to even get 10k so the anount is irrelevant really.

      • p1 ama on 27/11/2017 - 23:22
        +18

        Then buy the car with your own money - you're making $250k per year and living in a million dollar house after all. Then you won't have to borrow any money and your issues are solved.

        • dlakers3peat on 27/11/2017 - 23:25

          In a year yes but the combined income is just new. Started new job just one month ago.

        • p1 ama on 27/11/2017 - 23:26
          +11

          @dlakers3peat: Then buy a cheap car you can afford and deal with the other things later. I think that's the only option.

        • dlakers3peat on 27/11/2017 - 23:28

          @psterio: yes i suspected as much. I was hoping there was another way that I was not aware of.

        • cameldownunder on 28/11/2017 - 17:56
          +7

          @dlakers3peat: Spending such money while in probation is really bad thing to do.

        • Jackson on 28/11/2017 - 22:28
          +5

          @dlakers3peat: buy yourself and old Camry or Magna from someone old codger who's finally decided to upgrade, you could pick one up for anywhere between 500 and 2k and get a relatively reliable one. People in this country are so rich and vain they think they need a new car every two years, and it needs to be a European. There's plenty of reliable old a cars around d these days going to scrap heaps. Buying an old car can be good for you, just not spending money on something you don't need, or reusing something that exists rather than support the making of a new thing, or just not spoiling yourself when maybe you shouldnt be anyway considering you are still not out of your mess can be a good thing. Enjoy the self imposed punishment :)

  • pegaxs on 27/11/2017 - 23:20
    +6

    Combined $250k/y and $1m equity? And you’re strapped for $35k for a car? Why isn’t redraw or savings an option? Take it out of savings and make up repayments. Shouldn’t take long to put $35k back in on that yearly salary. Take it out of the house equity. $35k wouldn’t even mark as a blip in $1m.

    Previous defaults and can’t work out how to get $35k for a car with that much equity and salary. You don’t need a new car, you need a financial advisor.

      • pegaxs on 27/11/2017 - 23:26
        +2

        My comment was posted before you replied to them. I was in the process of editing it out of my post, but since you replied, I couldn’t change it…

        • dlakers3peat on 27/11/2017 - 23:26

          That's ok no problem.

        • pegaxs on 27/11/2017 - 23:34
          +7

          one question that a few people have asked though is, why is savings a no go? I’m guessing if you have a default, you have none, because any you have/had was seized to repay the debt? I don’t get how you can have $1m in equity in a house and savings, but have a default debt you’re paying down. Just how big is that?

          Refinance your house, get that equity liquid again and resolve that default before you try to borrow money again.

          If it’s cleared in a few months, consider a cheaper car and then, in a year, you will have your credit back and a years worth of wages, go nuts, get right back into debt with a shiney new car.

          And I’m sorry, but I’m just really sceptical about this whole story. Something just doesn’t gel… :/

        • dlakers3peat on 27/11/2017 - 23:39

          @pegaxs: from what i understand i cannot refinance my home loan because that would involve the bank doing a credit check which would get instantly denied. Savings is minimal at this stage. Will have a lot more in a year but unfortunately that does not help me now.

  • holdenmg on 27/11/2017 - 23:28

    Sooo…

    How much to fix your car that just crapped itself?

    • dlakers3peat on 27/11/2017 - 23:31

      2005 Audi A4 3.2 L, transmission died. Mechanic said get rid of it so I did not bother getting a quote. He also said even if you fixed the transmission there is another 3-5k in repairs eg oil leaks, suspension, coolant leaking, need to replace steering rack and the list goes on and on.

      • Krankite on 28/11/2017 - 13:09
        +6

        Trade the Audi for a 2005 corolla or a motor bike. You (profanity) up and had to default, now is not the time to spend.

        • Other on 28/11/2017 - 19:24

          now is not the time to spend.

          The default was 4 years ago….. How long should he wait before his allowed to spend?

        • HighAndDry on 28/11/2017 - 20:25
          +3

          @luciferaust: At the very least after he's repaid all his debts.

        • Other on 28/11/2017 - 22:13

          @0blivion: I should tell the mega wealthy that!

  • Yttrium on 27/11/2017 - 23:39
    +7

    I need to get a car loan for about 35k.

    Is that a Need or a Want ?

    • dlakers3peat on 27/11/2017 - 23:41
      +1

      I can't even get 5k

      • Yttrium on 27/11/2017 - 23:43
        +18

        You get $7k every fortnight in salary income.

        • dlakers3peat on 27/11/2017 - 23:47
          +2

          Yes i understand unfortunately i am paying a substantial amount back to creditors. in 3 months i would have enough to buy a cheap car but unfortunately i need a car immediately.

        • Yttrium on 27/11/2017 - 23:55
          +9

          If you are resourceful, and make your finances a priority, you will find a way, given your large income.

          If you are not resourceful, life will continue nevertheless.

          In bankruptcy proceedings, there is usually an arrangement to allow the debtor to continue to pay for life's essentials. Depending on your arrangement, you may be able to pause repayments, to allow you to keep $5k of your 14k monthly income. And then buy a transport-car , not a luxury status symbol.

        • dlakers3peat on 28/11/2017 - 00:01

          @Yttrium: my defaults have never reached that stage. I simply agreed with them to pay a certain amount every month. I understand your point but my problem is if i could wait another 3 months or so i would have the money to pay cash but unfortunately for me i need a car immediately.

        • Yttrium on 28/11/2017 - 00:05
          +1

          Change the agreement.

          The banks are lucky to get anything from a bad debt at all. You are in charge of how much you pay. The banks will presume that they are in charge , but you are the boss.

          Go to the FIO if you must.

        • dlakers3peat on 28/11/2017 - 00:09

          @Yttrium: i could change the agreement but they ask for a statement of financial position which includes payslips, bills etc. I am worried if they saw my new income they would want me to pay back even more.

        • Yttrium on 28/11/2017 - 08:46

          @dlakers3peatyou are the boss. If they ask for financial statements , say no.

          Tell the bank that payments will be deferred.

        • cameldownunder on 28/11/2017 - 17:58
          +6

          @dlakers3peat: but unfortunately i need a car immediately.

          Rephrase but unfortunately i need ** an expensive ** car immediately.

        • Bluberry on 28/11/2017 - 18:00
          +3

          @dlakers3peat: try public transport. All the time spent in a bus helps to think clearly about finances. Thats what you really seem to need.

        • Other on 28/11/2017 - 19:26

          @Yttrium: He doesn't have to be in BK, as soon as you default then banks hit your credit report, even if you do come to an agreement.

        • dlakers3peat on 28/11/2017 - 22:53

          @cameldownunder:
          I know this is ozbargain but in todays world do you really think 35k is an expensive car?

        • CheapskateQueen on 28/11/2017 - 23:20
          +8

          @dlakers3peat:

          Yes. Are you kidding me. You are something. There is no need to be buying a 35k car now if you're in debt.

          Go buy an old car that will get you A to B.

          Seriously what a joke.

        • dlakers3peat on 28/11/2017 - 23:26

          @CheapskateQueen: based by your name i am not surprised by your comment. Do happen to live outside of Sydney or Melbourne.

        • CryssieJade on 28/11/2017 - 23:29
          +1

          @dlakers3peat:

          Yes, it's a lot of money. I share a $7000 car with my Mum, and because we went halves, it's the best car we have ever had. It has an engine, is less than 10 years old, and looks almost new. Why would I spend more than I need? $35k is a lot of money to spend on a depreciating asset. Getting a loan on a depreciating asset is financial suicide.

        • CheapskateQueen on 28/11/2017 - 23:29
          -1

          @dlakers3peat:

          No mate, I'm renting in Bondi Beach.

          But for someone who says they're in absolute default and can't afford a 35k car, i find your statement that you need a 35k car utterly ridiculous.

          You need a car. Not a car you can't afford.

          I'm annoyed that so many of us are wasting our time on this thread. Bye.

        • dlakers3peat on 28/11/2017 - 23:33
          -4

          @CheapskateQueen: i think renting is fincial suicide so there you go. Btw i can claim my repayments as a tax deduction as its used for work purposes.

        • CheapskateQueen on 28/11/2017 - 23:35
          +4

          @dlakers3peat:

          Ugh. Actually my investment property covers my rent so i get to live in the suburb I want.

          And no you can't claim principal repayments on your car as a tax deduction. So double ugh.

          Anyway. Over it. Enjoy your debt mate.

        • dlakers3peat on 28/11/2017 - 23:38
          -1

          @CheapskateQueen: thats nice thanks for your support.

        • downbythecreek on 29/11/2017 - 06:54
          +2

          @dlakers3peat:
          Sounds to me like youre not far off financial suicide yourself…

        • dlakers3peat on 29/11/2017 - 15:27

          @CheapskateQueen: you are absolute and total hypocrite. You buy an investment property in some suburb to help you rent in a suburb you cannot afford. You dont need to live in Bondi but choose to. Same way if i choose to buy a certain car. You are nothing but a eastern suburbs wanna be looking down on the rest of us. For people who don't know Bondi is one of the most expensive suburbs in sydney.

        • dlakers3peat on 29/11/2017 - 16:23

          @CryssieJade: are you married with 3 kids? I would like you to see manage this in my situatuon.

        • CheapskateQueen on 29/11/2017 - 16:47

          @dlakers3peat:

          … lol okay mate. Like I said, enjoy your $35K car and your debt.

          I myself am enjoying living in bondi debt free, in a $15K car I bought second hand.

  • HighAndDry on 28/11/2017 - 00:10
    +3

    The responsible advice is: Buy a car you can afford - especially if you're climbing out of a default, spending money you don't have right now is not a good idea, even if you could. Consider this a message from the universe to NOT finance stuff for a while.

    The irresponsible advice that you're actually asking for: There are people who will let you borrow money (a LOT of money) against equity in property without doing any kind of credit check, and at interest rates somewhat comparable to credit card cash advance rates (i.e. exorbitant, but not too exorbitant).

    Edit: Honestly though, if you have minimal savings but high cashflow… Ubering everywhere is probably an option.

    • dlakers3peat on 28/11/2017 - 00:20
      +2

      Thanks for the advice and would not go down that path. We have no credit cards for obvious reasons and pay everything in cash. If i had more time then i would buy the car in cash but the car is needed immediately. I would be happy with a 15k loan but can't even get that due to the defaults.

      In some ways the credit system has some major flaws. 5 years ago when i was on a much lower income i could get loans and credit cards very easily which i could not afford. Now i am on higher income and can afford these loans I cannot get one.

      • HighAndDry on 28/11/2017 - 00:26

        Yeah, the credit system tries to tell the future in terms of how likely a person is to repay credit, but it relies on fairly inflexible algorithms that sometimes get it pretty wrong.

        The Uber thing isn't that serious a suggestion either - best option is probably hiring a (small, cheap) car mid-long term.

  • tsunamisurfer on 28/11/2017 - 00:24
    +9

    OP's story does not stack up.

    1) Only got a new job a month ago…OK….yet.

    2) 'Well over a million' in equity, unless that equity was gained within those turbulent 4 years, (unlikely) then he woul dhave much of the $1m equity at the time of the turbulence. Why would he not draw from equity rather than let credit file go to ruin?

    3) NEED $35k for a car?

    • HighAndDry on 28/11/2017 - 00:31

      Eh. It's improbable but not impossible. Bad credit can balloon very quickly: being late on a few payments makes it harder to access equity, which if you've pushed back other financial obligations, can mean that when they become due you're completely unable to access any other kind of credit to repay it.

      And have you SEEN the property market the last 4 years? There are more than a few suburbs where property prices have increased spectacularly in the last 4 years. Combine that with OP possibly paying down principal on a fixed term loan, and you can easily have "repayments + capital gains" approximate $1mil.

    • dlakers3peat on 28/11/2017 - 00:36

      My home loan was never set up with a redraw facility so this was not something i could utilise. Looking back i should have done some things differently. I was so far behind in my home loan i got approved to get the money out of my super to pay the bank back the arrears. There was no way the bank was going to let me refinance after that.

      At the end of the day this predicament i am in is my own fault which i am paying for in many many ways.

      • spackbace on 28/11/2017 - 01:47
        +4

        It happens, don't think too much of it

        I'm just going through a seperation after 10 years and who do you reckon racked up the debt over that time to make ends meet… Yeah not fun. But I'm now trying to just get my head above water and budget to repay it all and get back on track!

  • [Deactivated] on 28/11/2017 - 02:07

    Also don't forget the 20/4/10 rule :)

    • holdenmg on 28/11/2017 - 08:22
      +2

      I'm only just able to understand the 6/2/2 rule. lol

      • pegaxs on 28/11/2017 - 10:16
        +7

        Only rule I like is rule 34…

        • HighAndDry on 28/11/2017 - 20:27

          So long as you also understand the 18+ rule…

    • Dpkmax on 29/11/2017 - 08:14
      +3

      20/4/10 rule, which says you should: Make a down payment of at least 20%. Finance a car for no more than four years. And not let your total monthly vehicle expense, including principal, interest and insurance, exceed 10% of your gross income

      • hashtagbargain on 29/11/2017 - 14:32

        Thanks for the explanation, was wondering what he was talking about. Seems like sound advice!

        • Dpkmax on 29/11/2017 - 14:34
          +1

          @hashtagbargain - same here I too was wondering then I googled it and to avoid other Ozbees taking the trouble of searching I copied and pasted here. Enjoy your day

  • chumlee on 28/11/2017 - 06:25
    +3

    Try a peer to peer lender like ratesetter otherwise if your wife has a good credit history get her to apply

    • dlakers3peat on 28/11/2017 - 09:09

      If you proceed to apply for a loan, RateSetter Australia RE Limited will request your full credit file as a credit assistant, similar to when you apply for a loan with a bank. This will be recorded on your credit file as a credit enquiry, and may affect your Veda credit score.

      Wife has a default as well as one of the loans we defaulted on was in joint names.

      • chumlee on 28/11/2017 - 09:49

        Move on from buying new and explore other options such as a novated lease through your employer for example if they offer it

        • dlakers3peat on 28/11/2017 - 09:55
          +1

          unfortunately again this will involve a credit check like all finance.

  • onetwothreefour on 28/11/2017 - 06:29
    +17

    Buy a car for approx 2k, run it into the ground for the next 12 months until you can afford to buy a better car.

  • iamagirl1969 on 28/11/2017 - 08:44
    +1

    You can go to Good Shepherd Microfinance and get a NILS (no interest free loan) of up to $3000. This will allow you to buy a second hand clanger that will last you 12 months until your finances are in a better shape. These loans are open to people who cannot get credit the normal way either because of previous credit defaults or they live on Centrelink Income.

    The other option is to see if your employer does novated leasing on a car, but unfortunately that will require you to go through a credit check.

    Other option is just to hire/lease a car on a week to week or monthly basis. If you hire something smallish/cheapish (like a Hyundai I30) I can't imagine it being more than $60 or $70.00 a week, which is about the same cost as running a medium sized car in inner Sydney five days a week. The good option about this is that the weekly payments will cover everything (you won't have to worry about registration or insurance or servicing as the car hire/lease company will take care of all of that.

    Finally go and see a qualified financial counsellor. For someone earning so much money, you don't appear to have much financial acumen. (e.g. you want a new car but it has to be a 35k car??? (wt?) I drive a 20k Mazda 3 and before that I had a second hand BF Falcoln station wagon…….and before that a second hand BA Falcoln sedan. You need to live within your means or these issues will come up again and again and again…….

    • Yttrium on 28/11/2017 - 08:49

      Nils is a good idea

      • dlakers3peat on 28/11/2017 - 09:15
        +5

        To be eligible for NILS you must have a Health Care Card or earn less than $45,000 a year (after tax). Loans cannot be used for cash, bond, rent arrears, debt consolidation, holidays or bills.

        Loans are available for up to $1,500 for essential goods and services such as fridges, washing machines and medical procedures.

  • FAIL on 28/11/2017 - 08:57
    -4

    There is some terrible advice from people that have no idea what they are talking about. Due to your asset position there are plenty of lenders that will lend to you, especially for that amount however the things that will hinge the approval is if they are financial defaults or not ie utilities and also on the size of the default and the amounts outstanding. I've had clients in the same position where they are heavily asset backed and also have defaults, just because you get a default doesn't mean you suddenly can't be asset backed. The advice someone gave of just go to a dealership and put an application in is stupid as they only deal with tier 1 lenders generally who won't look at this and just end up but another hit on your credit file and lowerering your score further which just makes it harder for you, same goes for banks for that matter. You do have a few options but as I mentioned there are a heap of variables like the type and size and if they are paid in full plus a few more but from what you've said it doesn't seem like an overly hard application.

    • dlakers3peat on 28/11/2017 - 09:13

      The defaults are credit cards and they are fairly large 10k each. 1 personal loan as well 10k. Paying these off but not paid in full. I did settle a couple of the larger ones but as you know creditors can still see them.

      • FAIL on 29/11/2017 - 01:40

        Sometimes you can get statements and depending on how far through or what you've paid down there will be some financiers that will be more lenient on you. In all honesty they do hate financial defaults the most so it does make it a lot harder but there are still a few avenues, especially being asset backed. I would suggest that if you do finance something go for something smaller and pay it down relatively quick, still let it run for at least 12 months so that you can use it as a credit reference for next time round as redeemable credit will go a long way to getting you back on track. I have clients that want to go straight into their dream car but I always try and talk them back to a more reasonably priced car as they will send up paying far too much for a car that simply isn't worth it.

    • Baysew on 28/11/2017 - 10:24
      +1

      I need to get a car loan for about 35k

      Due to your asset position there are plenty of lenders that will lend to you

      Pretty sure it would be helpful to the OP if these lenders were actually named.

      • HighAndDry on 28/11/2017 - 11:18
        -1

        Quite the opposite. These are the lenders who don't advertise, but also are rarely good advice for anyone. I could refer OP to more than a few but I make a rule never to do so (OP or others). Give a second's thought and you'll understand why.

      • FAIL on 29/11/2017 - 01:47

        A lot don't have a direct channel so you have to go through a broker or authorised representative. Plus I don't know enough about his scenario so I could give him a name of someone that wouldn't be suitable for his application so it would be pointless.

    • HighAndDry on 28/11/2017 - 11:16
      +1

      Due to your asset position there are plenty of lenders that will lend to you, especially for that amount however the things that will hinge the approval is if they are financial defaults or not ie utilities and also on the size of the default and the amounts outstanding.

      As I mentioned above, OP's asset position means there'll be plenty of lenders willing to lend at credit card (cash advance) rates basically on a no-questions-asked basis. But just because it answers OP's question doesn't mean it's good advice.

      OP is coming out of a default, trying to be financially responsible, and just got into a high-paying job. Now is NOT the time to splurge and spend future income. (That time is probably never, but especially never for OP right now).

    • Other on 28/11/2017 - 19:29

      I'm not sure why you got downvoted. What you say is true in regards to defaults.

      however the things that will hinge the approval is if they are financial defaults or not ie utilities and also on the size of the default and the amounts outstanding. I've had clients in the same position where they are heavily asset backed and also have defaults, just because you get a default doesn't mean you suddenly can't be asset backed. The advice someone gave of just go to a dealership and put an application in is stupid as they only deal with tier 1 lenders generally who won't look at this and just end up but another hit on your credit file and lowerering your score further which just makes it harder for you, same goes for banks for that matter.

      True.

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