Second Chance Car Loans Vs. Payday Loans

We’re all familiar with well-known Payday Lenders. They’re everywhere, and they’re not going away any time soon.

Also known as SACC (small amount credit contract) and MACC (medium amount credit contract) lenders, these companies offer high interest, short term loans to people in need. So what makes a Payday lender affect your credit file? The answer is that there is no short answer. Payday loans can affect someone’s eligibility for future financial commitments in a multitude of ways. You’ll be glad to know that there are opportunities to help increase your chances of getting a car loan or personal loan in the future, even if you’ve had short term loans in the past.

What’s the big deal?

Payday loans, also known as ‘short term loans’ generally demonstrate that someone is unable to make ends meet with their current form of income. They need to resort to small amount, high interest loans in order to afford either unexpected bills, or their general lifestyle. For some people, having an emergency savings account is not realistically maintainable- That’s life! At Ume Loans, we understand that life doesn’t always go to plan, which is why we also consider certain forms of debt consolidation as part of your loan. We can also consider covering the cost of certain expenses, if they’re going to benefit you in the long run. This will do a world of good for your credit profile if you’re considering going down the path of taking out a short term loan.

Will it show on my Credit File?

More often than not, payday lenders will place what’s called an “enquiry” on your credit file each time you apply for a loan with them. Even if you’re just considering options to borrow a small amount and haven’t genuinely applied, these enquiries can still land on your file. Other Banks and Lenders will recognise that you’ve delved into a payday loan space, and will take that into consideration when assessing you for finance. This won’t mean you should be declined right away, but it likely to decrease your chances of an ideal approval. Taking out a loan with Ume Loans will not negatively impact your credit file as these short term facilities do. Ume Loans is a recognised lender in Australia that does not sit on the same fence as Payday lenders. If your loan is paid well and you’re looking to finance another car in the future, Banks and lenders would look upon a Ume Loans facility favourably over any short term debts.

The “SACC” Spiral

Short term loans (SACC facilities) can become difficult to manage if your repayment process is not well organised. Missed repayments can attract high fees and penalties, often drawing a person into an even more difficult situation than they were initially in. It’s common to see people take out several more SACC loans to compensate for the initial loan they took out, putting them in to a never-ending spiral of high interest debt. Ume Loans has a supportive approach towards helping clients make their repayments on time, and encourages open communication with our team on these matters. If a client cannot make a scheduled repayment on time, it’s in everyone’s best interest to make sure a client has every opportunity to keep their record clean.

If you feel you have or are experiencing difficulty with short term loan commitments, speak to our Team today– we don’t judge!