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Hear from people who found the right loan
In our bad credit loans guide:
Firstly, it’s possible. You might not be able to walk into your local bank branch and get one. But if you look in the right place, getting a personal loan with bad credit can be relatively straightforward.
Thankfully you are looking in the right place. We can help connect you to multiple specialist lenders who offer loans for bad credit borrowers.
You'll be able to see real offers and interest rates based on your situation, without it impacting your credit score.
Bad credit personal loans are designed for borrowers who have a low credit score. This is usually because the borrower has defaults or other negative information on their credit report.
But in many respects bad credit loans work in the same way as other personal loans. You borrow a fixed amount of money for a fixed term (duration) and repay it in weekly, fortnightly or monthly instalments, plus interest and fees.
The key difference is that bad credit personal loans are riskier for lenders. Because of this, there are some limitations to be aware of.
|Standard personal loan||Bad credit personal loan|
Up to $100,000
Up to $30,000 (but varies by lender)
Starting from around 7%
Starting from around 15%
Major banks, credit unions and online lenders
Specialist bad credit lenders
Proof of income and expenses required
Usually 3 months
Up to 6 months
Don’t waste your time applying for a personal loan for bad credit with a bank or credit union. Chances are you won’t be approved. This could affect your credit score further.
Instead, consider looking at the lenders who specialise in loans for bad credit borrowers.
You can compare your options now using Money Matchmaker®.
You’ll see tailored quotes from up to 12 lenders. There’s no obligation to proceed and it won’t impact your credit score.
The average personal loan interest rate for loans with bad credit (0-459 credit score) is 25.25% p.a. That's according to on personal loan statistics compiled by Money.com.au's based on real quotes provided to borrowers in 2023. The average rate for borrowers with a credit score between 460 and 660 is 20.07% p.a.
But remember, your interest rate will be tailored to you and some bad credit borrowers will qualify for lower rates, starting from around 15% p.a.
It's definitely worth your while shopping for the lowest interest rate you can find, as it can have a major impact on your regular repayment and how much the loan will cost you overall.
Remember to pay particularly close attention to the loan's comparison rate as this factors in how fees impact the overall cost of the loan. Use a personal loan calculator to work out the cost of different loan options based on the rate.
|Loan amount||Weekly repayment (15% interest)||Weekly repayment (20% interest)|
First, you’ll want to check you meet the basic criteria for applying. You must be:
In addition, lenders will assess other aspects of your financial and living situation. They’ll consider:
Traditional lenders assess personal loan applications based on a small number of factors relating to credit history.
A specialist bad credit lender will look at your credit record in more detail.
Not all credit defaults are viewed the same. Non-financial defaults (e.g. a phone bill) are generally less of an issue for bad credit personal loan providers. Financial defaults (e.g a missed loan or credit card payment) are more serious.
A specialist lender will consider whether any defaults have now been repaid. Paid defaults are less of an issue. They may also consider whether you’re making progress towards repaying any defaults that are still outstanding.
Specialist bad credit lenders will factor in the age of the information on your credit file. For example, they may still consider your application if you were discharged from a debt agreement more than 12 months ago.
Your credit history is based on, well, history. If your overall financial position has improved in the meantime and you’re in stable employment, a bad credit lender will weigh this up against any negatives from the past.
Depending on your situation, you may be eligible for a no interest loan through the No Interest Loan Scheme (NILS).
NILS is a Government initiative that lets Australian residents get a loan of up to $2,000 with no interest, fees or credit checks.
NILS can only be used for essential purchases, like home appliances or car repairs.
Earn less than $70,000 annual income before tax as a single person (or $100,000 annual income before tax if you have a partner or dependants); or
Have experienced family or domestic violence in the last 10 years; or
Have a Health Care Card or Pension Card You must also be able to prove that you will be able to repay the loan.
Not necessarily. It depends on WHY you have bad credit. If you no longer have any unpaid default and you’re not currently bankrupt or subject to a Part IX debt agreement, it may be possible to get a bad credit loan.
Assuming you also meet the lender’s other eligibility criteria.
However, you will have fewer options to choose from if you need a bad credit loan. If you’re struggling to find a bad credit personal loan, you could consider working with a personal loan broker.
It may be possible. Lenders will consider all of your sources of income and your expenses when assessing your bad credit loan application.
If you can demonstrate overall that you will be able to afford the repayments, you may still be approved.
Compared to a borrower with good credit, a bad credit loan will be more expensive in terms of the interest rate charged and sometimes the fees too.
This is because bad credit loans are a greater risk to the lend
This will depend on your credit history, your other financial circumstances and what you need the loan for.
In general, when looking for a the best bad credit loan for you, consider the following factors:
The eligibility criteria
The interest rate
The term (duration) of the loan
How flexible the repayments are (weekly, fortnightly or monthly ideally)
Can you make extra repayments without penalty?
Being self-employed doesn’t necessarily rule out being approved for a bad credit personal loan.
In the absence of payslips you’ll need to provide alternative documentation to get approved. For example, up to two years worth of tax returns.
To save on interest on your bad credit loan, shop around for the lowest interest rate you can find, select the shortest loan term you can afford and make extra repayments to pay the loan off faster if you’re able to.
Also consider applying for a secured loan if you can as these generally have lower interest rates.
Once you have been repaying the loan for more than 12 months, you could also consider refinancing the personal loan to another lender.
A solid repayment record is likely to have helped your credit score to improve, meaning you might be eligible for a cheaper rate.
Personal Loans guides and resources
The great thing about personal loans is they can fund almost anything. They are perfect when you need that bit extra to cover expenses, start a project or reset your finances to get back on track.
*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 $10,000 over 3 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.