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Written byShaun McGowan
Firstly, it’s definitely possible to get a car loan with bad credit.
There are lenders who specialise in helping people get back on track and give you a second chance.
These days lenders have access via your credit report to see:
Your credit score and history shows lenders your past performance with other companies.
You'll need to be able to give the lender an understanding of why you had missed payments or defaults.
And of course, your situation may be much better than what it was previously. You may have a new job, be earning more money, paid off some defaults and kept up with all your commitments.
If this is the case, getting a car loan with bad credit should be achievable.
For instance, if you have paid your defaults off, that is looked at more favourably to unpaid defaults.
Also in this context, a default to an energy company, or a gym for instance is a lot more favourable to a default to another finance company.
For people with bad credit, lenders are going to want to understand two things:
If these two things check out, a lender will be able to offer you a bad credit car loan, but it's likely going to have higher interest rates and some fees attached.
This is because you're being considered higher risk than someone who has excellent credit.
For people looking for a car loan with a bad credit history, the good news is, there are lenders who specialise in financing cars for you.
Lenders love boring, or should we say, consistency!
They love it if you've had the same job forever and have been at the same house since you first left home.
Here's an example of how your employment history can influence your approval.
You can qualify for car loans with bad credit in Australia if you are:
Often people find out from a lender declining their application.
If this happens, you need to request a copy of your credit report from one of Australia’s three credit bureaus:
Once you’ve got your credit report, you’ll be able to see where any slip-ups in the past have happened.
Sometimes, you’re able to dispute these.
Some people may even 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.
There are a couple of types of bad credit and not all are created equal in the eyes of lenders:
With these 2, financial defaults are frowned upon and will make it the most challenging to get a bad credit car loan.
There’s one more thing to keep in mind when looking at your credit file: whether any defaults are paid or unpaid.
Paid defaults show you have made an attempt to clear your debt and are taking responsibility for your finances are the preferred type of default.
With unpaid defaults, depending on what they’re for exactly, a lender may ask you to make good on this before they extend a loan to you.
You’ll need to wait until you have been discharged from your bankruptcy or part IX debt agreement for a minimum of 12 months before you can apply for a bad credit car loan.
With most bad credit car loan providers, they operate across the country. Most are located in major capital cities like Perth, Sydney, Melbourne, Brisbane, Adelaide and Hobart.
All the lenders we work with all have Australian based teams. So rest assured, when arranging your loan you'll be working with a lender in Australia.
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Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.
*Information about comparison rates Comparison rates are designed to allow borrowers to understand the true cost of a loan by taking into account fees and charges, the loan amount and the term of the loan. The comparison rate is based on an unsecured fixed rate personal loan of $30,000 over 5 years. WARNING: Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.