Second Chance Loans Bad Credit

Do you have a less-than-perfect credit history? We believe every Australian citizen deserves financial support and a second chance at credit repair. Learn about second chance loans for bad credit to make an informed choice.

What this article covers:

What Are Second Chance Loans for Bad Credit?

second chance loans bad credit

Simply put, 2nd chance loans for bad credit are financial products designed for applicants who can’t access traditional bank loans due to their bad credit. After all, banks and financial institutions may demand healthy credit files, impressive cash flows, and almost perfect scores, which makes many Australian citizens unable to access loans.

Lenders who offer second chance personal loans in Australia understand that your credit score reflects your past finances. However, they’re more interested in your current finances.

So, they’ll look at your employment status, overall income, recent financial history, outstanding debts, and expenses to determine if you can repay the loan. By assessing suitability and affordability, these lenders can provide you with easy funding.

When they do, you get the chance to repair your credit. To explain, you can make your repayments on time, which will gradually raise your credit score.

How Can You Use Second Chance Loans?

As second chance finance loans, personal, you can use them for countless expenses, such as:

Second Chance Loan Requirements

Are you worried your application for high-risk loans in Australia will get rejected? These are the basic requirements that many direct lenders have:

  • To be 18 or older
  • To have Australian citizenship or permanent residency
  • To have a form of employment
  • To have a checking account
  • To have sufficient income (compared to the loan amount)

Types of Second Chance Loans

second chance loans for bad credit

We can classify these loans into three types.

  • Small Loans: Also known as Small Amount Credit Contracts (SACCs), these loans are under $2,001. Their terms are short, ranging from 16 days to 12 months. And they have high costs.
  • Medium Loans: Medium Amount Credit Contracts (MACCs) are over $2,000 and up to $5,000.
  • Big Loans: These loans exceed $5,000 and have long repayment terms of one to ten years. They tend to have low interest rates.

How to Increase Your Chances of Approval

Your bad credit might make you hesitant to apply for a loan, so check out these tips for a solid chance at approval:

Provide Security

When you apply for a secured loan, you offer an asset (house, car, boat, or else) as collateral so that the lender can claim it if you’re unable to repay the loan.

If you’re confident in your ability to repay it, a form of collateral can inspire the same confidence in a lender and reduce the risk you pause, making them more likely to accept your loan for bad credit application. Note that lenders can’t request collateral for SACCs.

Reduce Your Credit Limit

A quick way of increasing your credit score (and chances of approval) is reducing the limits on your credit cards. After all, lenders look at your credit limit as potential debt you can get into, and a high credit limit means high risk.

Final Thoughts

Overall, second chance loans for bad credit are exactly what they sound like. They give applicants with bad credit financing, and a chance to repair their credit. So, if you can afford to repay a loan, such lenders will approve your application despite your low credit score!

Was the guide helpful? Check out these extra resources to delve deeper: