You are always going to be up against it when applying for a loan with defaults on your credit file.
But if you have also only been in your job for a couple of months, then it will be even more challenging to get approved.
Most lenders will decline you before they even look at your application. Too many red flags, and a system-generated decline notification would likely follow.
But that doesn’t mean a deal isn’t possible if you know where to look, and who to speak to.
This week, we have a case study where our brokers had to pick up the phone to a lender and advocate on the customer’s behalf to make an approval possible.
Having an expert in your corner can make all the difference in a tricky situation.
Customer of the Week
This week, a customer came to us through one of our partner dealerships in Western Sydney.
He was looking to purchase a vehicle worth just under $18,000 and had a chunky cash deposit of $8k ready to go, leaving $10k remaining to finance.
A relatively small amount for a car loan, but it was not going to be smooth sailing.
The Roadblocks
1. Past Credit File Defaults
His file showed two previous defaults on a small credit card debt and a larger telco debt that had built up.
On the plus side, he had already paid both of these off, and his credit report showed this.
If they had remained unpaid, finding a lender would have been nearly impossible.
Unfortunately, his credit score was still quite low at just over 400, which really limited his choice of lender.
2. Low Employment Tenure
The second problem was that he had been in a new casual job for just 2 months.
This is below the acceptable threshold for all lenders who specialise in bad credit borrowers.
Most require a minimum of three months for a casual employee. So, we had some work to do!
The Gusto Strategy
We knew of one lender who would consider a loan with the paid defaults, but the employment tenure was a sticking point.
So our head broker jumped on a call with the lender to make the case that this was a good deal to make.
This was done BEFORE submitting a formal application.
We had two big selling points to work with:
- Good Income: While he was only 2 months into his casual role, he was earning good money and could easily afford the repayments.
- Big Deposit: A 44% deposit is huge skin in the game and not something any borrower would want to risk by defaulting on the loan.
The Result
Because we provided advanced context with the application and highlighted the selling points from the lender’s point of view, the application process was incredibly smooth.
Approval was secured quickly, and the customer was able to drive away in his new car shortly after.
The Takeaway
A lender’s credit rules cannot account for every variable in a customer’s profile.
Sometimes exceptions can be made if there are factors that are significant enough to offset other areas of concern.
But you need a broker advocating on your behalf so attention is drawn to those positive factors before a decision is made.
What is the Minimum Credit Score for a Car Loan?
You might assume a score below the 400 range could mean you are completely locked out of the finance market.
The truth is, we regularly secure approvals for clients with credit scores much lower than this.
There is no universal minimum score that applies.
While mainstream lenders will automatically decline bad credit, specialist lenders have entirely different assessment criteria.
We have put together a guide explaining exactly how lenders view different credit tiers and what it takes to get approved.
​Read the full article here​
More from the Gusto Group
Gusto Finance is part of a broader family of businesses built to help everyday Australians across every stage of the buying journey:
- 🏠Gusto Home Loans: We do for home loans what we do for car finance. Whether you’re buying, refinancing, or just want to know your borrowing power, our team compares options across a massive lender panel.
- đźš— Gusto Auto: Our Brisbane-based used car dealership. If you want a seamless experience, you can buy a quality used vehicle directly from us while Gusto Finance handles the loan.
- đź’¸ Gusto Cash: Need access to funds fast? We provide flexible personal cash loans for when life happens outside of a standard car or home loan.