Can You Get a Car Loan with Bad Credit in Australia?

Yes, You Can Get a Car Loan with Bad Credit

Good news: having less-than-perfect credit doesn't automatically disqualify you from getting car finance. Plenty of Queenslanders have gotten approved despite past credit issues. Here's what you need to know.

What Counts as "Bad Credit"?

In Australia, your credit score typically ranges from 0-1200 (depending on the bureau). Here's a rough guide:

Score Range	Rating	Loan Impact
800+	Excellent	Best rates, easy approval
700-799	Good	Competitive rates
625-699	Average	Standard rates, most lenders
550-624	Below Average	Limited options, higher rates
0-549	Low	Specialist lenders only

Common causes of bad credit:

• Missed or late payments
• Defaults on loans or bills
• Court judgments (CCJs)
• Bankruptcy history
• Too many credit applications
• Unpaid utility bills

Your Options for Bad Credit Car Finance

1. Specialist Bad Credit Lenders

These lenders specifically work with people who have credit issues. They charge higher interest rates (sometimes 12-20%+), but they'll consider applications mainstream banks reject.

2. Secured Car Loans

The car itself acts as security. Because the lender can repossess if you default, they're more willing to take the risk. Most bad credit loans are secured.

3. In-House Dealership Finance

Some dealerships offer "no credit check" finance. Be very careful here – interest rates can be astronomical (25%+), and the cars are often overpriced.

4. Guarantor Loans

If a family member with good credit guarantees your loan, you may get approved at better rates. But understand the risk – if you default, they're liable.

5. Novated Lease (If Employed)

If you have stable employment with an employer offering salary packaging, you may qualify for a novated lease even with poor credit. The employer's involvement reduces lender risk.

What Do Lenders Actually Look At?

It's not just about the score. Lenders consider:

Your employment:

• How long in current job?
• Type of employment (permanent, casual, self-employed)
• Income stability

Your living situation:

• Renting or owning?
• How long at current address?
• Monthly housing costs

Your credit history:

• How recent are the issues?
• What caused them?
• Have you recovered?

Current financial position:

• Current income vs expenses
• Existing debts
• Savings (even a small deposit helps)

How to Improve Your Chances

Before applying:

1. Check your credit report – Free at creditsmart.com.au. Look for errors you can dispute.

2. Pay off small defaults – Even clearing a $200 unpaid bill can help.

3. Stop applying – Each application leaves a mark. Pause for 3-6 months if you've been rejected multiple times.

4. Save a deposit – Even 10-20% shows financial responsibility and reduces lender risk.

5. Gather your documents – Payslips, bank statements, employment letter, utility bills. Being prepared speeds up approval.

When applying:

1. Be honest – Don't hide issues. Lenders will find them anyway, and honesty builds trust.

2. Explain the circumstances – Job loss, illness, divorce – context matters. Lenders understand life happens.

3. Show recovery – If you've been paying bills on time for the past 12 months, highlight this.

4. Start smaller – A $15,000 loan is easier to get than $40,000. Consider a modest first car to rebuild credit.

Interest Rates: What to Expect

Be realistic about rates with bad credit:

Credit Situation	Typical Rate Range
Good credit	6-9%
Average credit	9-13%
Below average	13-18%
Poor credit	18-25%+

The real cost:

A $20,000 loan over 5 years at 8% costs $24,332 total. The same loan at 18% costs $30,439 total.

That's over $6,000 extra in interest. It's still possible to buy a car, but factor this into your decision.

Red Flags to Watch Out For

Avoid these:

• "No credit check" promises (usually means very high rates)
• Pressure to sign quickly
• Unclear or hidden fees
• Verbal promises not in writing
• Balloon payments you can't afford
• Weekly payment quotes (always ask for total cost)

A Smarter Approach: Rebuild First

If you have time (6-12 months), consider rebuilding credit before applying:

1. Get a secured credit card ($500-$1000 limit)
2. Use it for small purchases (under 30% of limit)
3. Pay in full every month
4. Watch your score climb

After 12 months of perfect payments, you'll have more options and better rates.

How We Help at SEQ Car Brokers

We work with a network of lenders, including those who specialise in non-standard credit situations:

• We know which lenders suit which situations – No point applying to the wrong ones.
• We present your case properly – How you present matters. We know what lenders want to see.
• We find the right car at the right price – No point paying $18,000 for a $12,000 car just because the dealer offers "easy finance."
• We're upfront about what's possible – If the numbers don't work, we'll tell you. No pressure, no false hope.

The Bottom Line

Bad credit doesn't mean no car. But it does mean being smart:

• Know your credit score
• Be realistic about rates
• Avoid predatory lenders
• Consider rebuilding if you have time
• Work with someone who knows the landscape

Got questions about your situation? Chat with us. We'll give you an honest assessment of your options—no judgment, no obligation.