How Does a Part IX Agreement Affect my Car Loan Application?
It’s easy to take your car for granted when it’s sitting in your driveway awaiting your instructions for take-off. But what if it wasn’t there? Being without a car is an inconvenient pickle many people find themselves in, as it’s not always easy to come up with funds for a new one. There are many options for gaining approval for a car loan, whether it’s through your bank or an alternative lender; either way, it pays to do your research to ensure you’re getting the best deal. However, not everyone is in the perfect situation to be applying for credit. For people with less-than-squeaky-clean financial histories, a bad credit car loan may be one of the few realistic avenues available.
There are many options for gaining approval for a car loan, whether it’s through your bank or an alternative lender; either way, it pays to do your research to ensure you’re getting the best deal. However, not everyone is in the perfect situation to be applying for credit. For people with less-than-squeaky-clean financial histories, a bad credit car loan may be one of the few realistic avenues available. For example, if you find yourself in a Part IX (9) debt agreement, or recently discharged from your Part IX agreement, it may be difficult to get finance. But that doesn’t mean you should stop your hunt for a car…
What is a Part IX?
This type of agreement is an alternative to full bankruptcy and is formed between you and your creditors (via an administrator) when you can’t afford to repay your debts. Your creditors agree to receive an amount of money that you can afford to pay back. Generally, interest and fees are frozen whilst you pay back the principal debt. In General, If the majority of creditors agree to your proposal, you will enter into a binding debt agreement under Part IX of the Bankruptcy Act 1966, and it will be displayed on your credit report.
How is a Part IX different to full bankruptcy?
A Part IX Debt Agreement is initiated by you, as the debtor, submitting a proposal to your creditors. Bankruptcy can also sometimes be voluntary or, if you owe your creditors more than a combined total of $5,000, you can be forced into bankruptcy. Part IX unsecured creditors are typically bound by the agreement to accept any decided debt amounts; whereas with bankruptcy, unsecured creditors would usually cease chasing you for payment of your debts.
Read more about the differences between a Part IX debt agreement and bankruptcy.
How will a Part IX affect my ability to get a car loan?
There is nothing stopping you from applying for a car loan while you have a Part IX Debt Agreement in place, however, you may not have the success you hope for. The idea of a Part IX is to help you pay off debts, so getting in deeper in the process isn’t something lenders will smile upon. Once you’re discharged from your agreement – it’s another story. There are various lenders outside the big banks who are more than willing to give people with a bad credit history a fair go. If you apply for a bad credit car loan and can show you can make your repayments, you’ll give yourself the best possible chance of finance approval – and a new car! (Subject to approval, depending on your overall circumstances). Rapid Finance may be able to assist in finding car finance that works for you – even if you have a Part IX.
Call us on 1300 467 274 to see if we can help you.