Bad Credit Car Loans

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Bad Credit Car Loans
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Here's how easy it is

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One smart-form

Simple & quick, we narrow down the lenders you're eligible for.

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Personalised rates

See multiple lender rates you actually qualify for, all at once.

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Checkout with confidence

After easily comparing, select the lender who best suits you.

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Our mission

Money.com.au (Money) is on a mission to enable Australian consumers to enjoy an online shopping experience for financial products, starting with personal loans.

We believe that by providing you with fair & transparent choice, we will achieve our mission, and help more Australians get better deals (more for your money).

Putting you first means:

  • We only show you loans you qualify for, ranked by the lowest repayment

  • We show you “apples with apples” loan comparisons (by simplifying & standardising information)

  • We do not accept paid endorsements or promote lenders based on commission.

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Compare car loan rates

Loan Amount
Loan Terms
Interest Rates
(APR)
Comparison Rates
(APR)
$5,000 - $150,000
36 - 60 months
3.97 - 4.67% 4.51 - 5.22% Get your rate
$5,000 - $50,000
18 - 84 months
5.95 - 17.95% 5.95 - 17.95% Get your rate
$5,000 - $50,000
1 - 5 years
6.99 - 20.49% 6.99 - 22.06% Get your rate
$2,000 - $50,000
24 - 60 months
19.95 - 28% 35.97 - 47.66% Get your rate
$5,000 - $63,000
3 - 7 years
--- --- Get your rate

Key features of a bad credit car loan:

  • Borrow from $5,000 to $100,000

  • Fixed interest rates

  • Repayments to suit your budget

  • Terms from 1 to 7 years (most common is 5 years)

  • Secured & unsecured options

Who is eligible for a bad credit car loan?

  • Australian Permanent Residents (& some visa holders)

  • Must be over the age of 18

  • Earn a minimum of $25,000 a year

  • Hold a valid provisional or full driver licence

  • Have been discharged from bankruptcy or a Part IX for a minimum of 12 months

  • Can show you are capable of taking on the debt and meeting your repayments.

Learn more about bad credit car loans

What is a bad credit car loan?

A bad credit car loan is a secured loan used by people with a bad credit rating to finance a car. Typically, it may often have a higher interest rate, and may also include higher initial or monthly fees. You can use a bad credit car loan to finance new and used cars.

The way “bad credit” is viewed by each lender is different. For instance, some may accept a paid default and still offer you a really good rate. It pays to compare and shop around all lenders to see who will offer you the best deal. You can do that simply by using our smart form.

Money Tip: Bad credit car loans are designed for individuals who have made mistakes in the past with their credit file but have the ability to meet repayments on a future car loan.

How do I know if I have bad credit?

When you complete our smart form to compare bad credit car loan offers, you’ll be able to view your up-to-date credit rating. This is free and has no impact on your credit file.

Alternatively, you can request a full credit report and history by contacting one of the credit bureaus in Australia. This will allow you to view and understand your credit history, and correct any inaccuracies — if there are any.

In Australia, there are three different credit bureaus:

Bad credit covers more than just bankruptcy or a Part IX debt agreement. Some people may have bad credit without realising it. Lenders will look at all defaults on your credit file when assessing an application, which will include everything from unpaid telco bills to credit card defaults and more.

Bad credit can often be split into three categories:

  • Non-financial defaults — i.e. anything that isn’t a financial default or insolvency. This could be unpaid gym memberships, phone bills, or power bills.

  • Financial defaults — i.e. unpaid credit cards or personal loans. Financial defaults are considered more serious than unpaid bills.

  • Insolvencies — i.e. Bankruptcy and Part IX Debt Agreements.

There are also two types of defaults: Paid and Unpaid. Paid defaults show you have made an attempt to clear your debt and are taking responsibility for your finances. Lenders may ask that you pay any unpaid defaults before granting approval on a loan — such as telco defaults.

Money Tip: As this type of finance is designed for individuals with poor credit history, it’s crucial that you find the best deal available to avoid any unmanageable future debt.

Compare bad credit car loans

Most lenders who offer a secured car loan will also offer bad credit car loans. You may qualify for a car loan with many lenders, though each will have its own pros and cons. The fastest and simplest way to compare personalised car loan offers is to use our smart form — simply answer some quick questions and see real, personalised offers in just a few minutes.

However, it’s still important that you read the terms and conditions of each loan offer to account for any other provisional fees or penalties. Take note of the fees payable, both at the start and during the term of your loan, as this can impact the total amount repaid.

These may include:

  • Late payment fees

  • Break fees or early termination fees

  • Stamp duty and on-road costs

  • Referral fees or brokerage fees

If you do not find any available offers to compare, you can work with a vehicle finance broker to assist in finding you a suitable deal and completing your application.

Brokers operate all across Australia — whether you need a bad credit car loan in Sydney, Melbourne, Brisbane, Perth, Adelaide, Newcastle, or Canberra, you'll be able to find one who can help you assess a range of suitable options specific to your financial circumstances.

Money Tip: A comparison rate is a useful tool for comparing car loan offers of the same amount and length - it expresses the true cost of a loan (Interest plus fees) as a simple percentage.

Best bad credit car loan rates

Bad credit car loan interest rates — and establishment fees — will be higher than a secured car loan. In Australia, interest rates currently range between 12.95% and 29.95%, while the fees you pay will vary depending on your lender and other factors.

If you are using our smart form, the advertised rate and comparison rate will be clearly displayed on your personalised results screen, which you can use to quickly compare and select the deal you think is best.

The interest rates applied to second-chance car finance may also be determined by:

  • The age of the vehicle

  • The type of vehicle

  • The amount you wish to borrow

  • The length of your loan

  • Your credit history

  • Your net income

  • If you own a property

Vehicle age and bad credit car loan rates example

Lender 1
Lender 2
Lender 3
Loan Amount
$10,000
$15,000
$20,000
Vehicle Age
Brand-New
Used - 2 years
Used - 5 years
Interest Rates
15%
18%
21%
Fees
$100
$500
$1,000

Important: This is an example and actual rates may differ. Use our smart form to see personalised rates.

Money.com.au aims to clear up the confusion around rates and approval, so we can provide the best consumer experience possible. We only show you real, personalised rates from lenders who can give you approval on the loan.

No hidden fees, no inflated rates, no stress, and no impact on your credit score.

Just real rates, from real lenders, who you can apply with immediately to get real deals. (Yes, really!)

Money Tip: Older vehicles are at greater risk of mechanical faults and other issues — the older the vehicle you wish to finance, the higher your interest rates will be.

How to qualify and apply icon

Ex-bankrupt and Part IX car loans

You can get a bad credit car loan if you are ex-bankrupt, and have been discharged from bankruptcy for a minimum of 12 months. You cannot apply if you are currently bankrupt. The amount of interest that will be applied to your loan will likely be higher than with other types of defaults.

You can qualify for a bad credit car loan if you have been discharged from your Part IX agreement for at least 12 months. Whether you are approved or not will depend on the individual lender criteria and your financial behaviour in the time since you have been discharged.

You can improve your chances of getting approval after Part IX by:

  • Showing good financial behaviour — i.e. arranging payment for all unpaid defaults and not having any defaults — paid or unpaid — on your file in the time since being discharged.

  • Having regular, paid employment.

  • Demonstrating an ability to earn and save enough money to meet your repayments.

Money Tip: A Part IX debt agreement is a legally binding agreement, often used as an alternative to declaring bankruptcy. It is included in your credit history and lenders consider Part IX to be a very serious factor when granting approval.

How to qualify and apply icon

How to qualify and apply

Whether you qualify for a bad credit car loan will depend on the number of defaults on your credit file, the severity of those defaults, and the total value of each.

For example, an ex-bankrupt will be deemed higher risk than someone with a credit card default, who will be deemed higher risk than someone with just an unpaid phone bill.

You can qualify for a bad credit car loan in Australia if you are:

  • Over the age of 18; and

  • An Australian citizen or permanent resident; and

  • Earn at least $25,000 per year; and

  • Hold a valid provisional or full driver licence; and

  • Have been discharged from bankruptcy or a Part IX for a minimum of 12 months; and

  • Can demonstrate ability to repay the loan

Each car finance lender in Australia offers a different type of application, assessment, and approval process.

If you use our smart form and find a lender you want to apply with, you will be directed to the lender’s website and need to supply all documentation as you normally would when applying for a secured car loan, which may include:

  • Proof of identity — i.e. passport or driver licence

  • Proof of income — i.e. such as copies of your tax return or recent payslips

  • Proof of your assets — i.e. any shares, vehicles, or property

  • Details of any current debts and expenditure — i.e. rent/mortgage, other loans and credit card details

  • Providing your bank statements

The approval process for a bad credit car loan is similar to a secured car loan. The main exception is that lenders will put greater consideration into your ability to repay the loan before granting approval.

Money Tip: Lenders will assess your application for a car loan based on the number of defaults on your credit history and their severity.

Summary icon

Summary

A bad credit car loan is a secured car loan that is suitable for individuals who are dependable and prove they can act responsibly despite poor credit history. As the borrower, you will need to ensure you are comfortable with the loan amount and your ability to meet your repayment obligations.

In summary, these loans:

  • Are similar to a secured car loan

  • Are available from a range of different lenders

  • Provide access to finance for ex-bankrupts or those discharged from a Part IX

  • Have higher fees and interest rates than a secured car loan

How much is the car you are looking to purchase?

Bad Credit Car Loans FAQ

How does a bad credit car loan work?

A bad credit car loan is similar to a secured car loan — a lender will approve an amount of money you can use to buy a car. The borrower will own the car and it will be used as security on the loan. The borrower will make regular repayments to the lender until the total loan amount plus interest is repaid.

What kind of cars can I purchase with a bad credit car loan?

You can buy new and used vehicles, and vehicles acquired through a private sale. You’ll generally get the lowest rates and fees if you’re financing the newest model of the car you can comfortably afford.

Can I apply for a bad credit car loan through my business?

Bad credit car finance is available to businesses — but there are generally specific business finance options that may be more suitable, such as a chattel mortgage or a commercial hire purchase agreement. These loans are designed exclusively for businesses and typically offer significant tax advantages.

How long does it take to approve a bad credit car loan?

If you meet the criteria for a bad credit car loan, you can typically have an approval completed within an hour. Once approved, the funds should be made available within 24 hours.

Can I get a car loan if I have defaults?

Yes, but in some instances, lenders will advise that you may need to pay any outstanding defaults before they are willing to offer approval for a bad credit car loan.

What fees will I pay?

The fees you pay on a bad credit car loan will depend on your lender. Brokers are often paid a brokerage fee for referring an applicant to the lender, and banks or non-bank lenders will often charge their own administration or set-up fees.

If you are using our smart form to compare loan offers, the fees associated with each loan will be clearly displayed on the results screen.

How long can I take out a bad credit car loan for?

In Australia, car loans are typically offered for 5 years. Some lenders may offer car loans for up to 7 years. When deciding on a term for your bad credit car loan, you’ll pay the least amount of interest if you choose the shortest term possible. With longer terms, a greater percentage of your initial repayments will be used to repay the interest instead of the principal.

How much can I borrow?

The amount you can borrow for a bad credit car loan will depend on your profile as a borrower. Generally, the more stable your recent financial history, the more you can borrow from a lender.

If you are approved for a bad credit car loan, you will be able to borrow the full amount of the vehicle price.

What other costs do I need to be aware of?

Your vehicle will act as security on the loan, and only the value of the vehicle will be taken into account when providing finance. This means that other costs — such as registration and insurance — may not be included in the loan amount.

How can I calculate repayments for different types of car loans?

Found a loan offer somewhere else and want to see how much it might cost? You can use our free car loan calculator to see estimated monthly repayments on a car loan and the total interest you might pay over the term.