Is it true? If you're blacklisted and want a car, do you have to wait 10 years?

(Photo Credit: freepik)

Have you ever heard the saying, "If you're blacklisted, you have to wait 10 years before you can apply for credit again"? 

This statement has made many people who have had financial problems lose hope. But the truth is... it’s not always the case!

Imagine you're looking to get a car to use for work or take care of your family. But when you apply for a loan, the finance company rejects you because you have a poor credit history. The question that follows is, "Do I really have to wait 10 years?" Let’s clear up the confusion today!

What does "blacklisted" really mean?

In reality, the term “blacklisted” is just a phrase commonly used by the public, but in the world of financial institutions, what they actually look at is your payment history in the credit bureau. If you've missed payments for more than 90 days, that information will be recorded as “bad debt,” which could make it harder to apply for loans in the future because banks and finance companies will see you as a high-risk borrower.

How long do you have to wait if you’re blacklisted?

A common misconception is that “once blacklisted, you have to wait 10 years.” But in reality, bad debt information is kept in the credit bureau system for only 3 years from the date you close the account. In simple terms, if you clear your debt, your information will be removed from the credit bureau within 3 years, not 10 years!

(Photo Credit: freepik)

So why do people say it’s 10 years?

The 10-year figure that many people misunderstand actually relates to the statute of limitations for civil lawsuits. This means that if a creditor doesn’t take legal action within 10 years, they can no longer sue you in court. However, that doesn’t mean the credit bureau will remove your bad debt information at the same time. So, don’t confuse the legal statute of limitations with the credit bureau’s data retention policy.

Can you still get a car loan if you’re blacklisted?

The answer is yes, but it’s not easy.

Generally, if you still have bad debt in the credit bureau, your chances of getting a loan approved by a bank or finance company are lower. However, there are exceptions! Some finance companies may consider other factors such as your income, occupation, or your payment behavior in recent years. For example, if you had bad debt 10 years ago but have been paying off other loans on time lately, some finance companies may still give you a chance.

What should you do if you want to buy a car?

If you’re planning to buy a car but have had a history of bad debt, here are 3 things you should do to increase your chances of getting approved for a loan:

• Clear your old debts – Paying off outstanding debts will help improve your credit score in the future.
• Build a new payment history – If you still have other loans, like credit cards or a mortgage, try to pay on time to show that you can manage your finances better.
• Choose the right finance company – Some finance companies may have more flexible conditions than traditional banks. Look for options that are suitable for you.

So, don’t let misconceptions stop your dreams! With good financial planning, you can still get a car loan even if you’ve had a history of bad debt

Read More:  Buying a Used Car: Why a Dealership Might Be the Better Choice!

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