Four Lenders Said No, We Found a Way!
Getting your first proper car loan is always meant to be an exciting milestone (even with petrol prices on the way up).
But for young borrowers, the system can be tough on them.
A shorter credit history, lower earnings, and inexperience managing things like Buy Now, Pay Later, means the deck can quickly feel stacked against them.
In this week’s customer story we have a 20-year-old who dealt with his fair share of rejections before finding the team at Gusto.
Scenario
Our customer had been casually employed for 18 months, and wanted to buy a serious 4×4.
Before coming to Gusto, he had tried to secure finance himself and applied directly to 4 different lenders.
He was knocked back by all of them!
Each application left an inquiry on his credit file, dragging his Comprehensive Score down to the low 300s.
An inquiry on its own is not a big issue, but a series in quick succession can lead to automatic exclusion from most lenders.
So, the team were faced with the following challenges:
- Buy Now Pay Later use: Regular use of a number of these services indicates poor budget management.
- Arrears on a Previous Loan: This had been fixed long ago but still appeared in his credit history.
- Age Restriction: Some lenders will cap the maximum loan to borrowers under a certain age.
We identified a lender that would overlook the credit file blemish, but due to the other issues would cap the loan amount at $20k.
Approved! Now to find a suitable vehicle…
Dealership Problems
The car he originally wanted was priced at $25k from a local Rockhampton dealership.
To their credit, they did consider lowering the price of the vehicle to meet his lower budget.
However, the catch was he had to cover the registration and roadworthy costs out of his own pocket.
So the deal is not as generous as it may have first appeared… Back to the drawing board.
Under Budget and Out-of-State
After some searching, he found a 2006 Toyota Landcruiser right on the $20k budget being sold privately.
But this created a new problem.
The vehicle was already 20 years old and most lenders will not finance a car this old, as we discussed in last week’s newsletter.
In this case, the lender that gave the approval will also consider some vehicles up to 25 years old at the END of the loan term.
This one just scraped in under this already lenient policy and was given the green light.
Now all he had to do was go and pick up the car… Which was hundreds of kilometres away in NSW.
But a quick flight and a road trip home and he has secured his new wheels.
The Takeaway
When you are young, casually employed, or buying an older vehicle, a whole range of lenders will just say No.
You need an expert in your corner who knows the exact lender policies to find the approval that matches your situation.
Another great result from the Gusto Team.