Can You Get a Car Loan If You Have a Low Credit Score?

📉 Can You Get a Car Loan with a Low Credit Score?

Yes! While a low credit score makes it harder to get approved, some lenders specialize in bad credit car loans. However, you may face:

❌ Higher interest rates
❌ Stricter loan conditions
❌ Lower borrowing limits

To improve your approval chances, it’s important to choose the right lender and structure your loan properly.

🔍 What Credit Score Do You Need for a Car Loan?

Lenders in Australia assess your creditworthiness based on your credit score range:

Credit Score (Equifax) Credit Rating Car Loan Approval Chances
✅ 800-1,200 Excellent Very high approval chances, best interest rates.
✅ 700-799 Good Likely approval, competitive rates.
⚠️ 500-699 Fair Some lenders may approve, but with higher rates.
❌ Below 500 Poor Limited options—bad credit lenders only.

If your score is below 600, you may need to apply with a specialist bad credit lender.

✅ How to Improve Your Chances of Getting a Car Loan with Bad Credit

If your credit score is low, follow these steps before applying for a car loan:

1️⃣ Check Your Credit Report – Identify and fix errors or unpaid defaults.
2️⃣ Make On-Time Payments – Show recent good repayment history.
3️⃣ Reduce Existing Debt – Lowering credit card balances improves your debt-to-income ratio.
4️⃣ Consider a Secured Loan – Using the car as collateral increases approval chances.
5️⃣ Use a Finance Broker – A broker can find lenders that accept low credit scores.

Even if mainstream banks reject your application, bad credit lenders may still approve you.

🚨 Can You Get a Car Loan with Defaults on Your Credit Report?

Yes! Some lenders accept applicants with past defaults, but conditions may apply:

✅ Paid defaults are viewed more favourably than unpaid ones.
✅ Older defaults (2+ years) have less impact on your approval.
✅ Multiple defaults make approval harder, but not impossible.

If you have defaults, working with a finance broker can help you find lenders that approve bad credit borrowers.

🚀 Why a Finance Broker Can Help If You Have a Low Credit Score

If banks reject your car loan due to bad credit, a finance broker can help by:

✅ Finding lenders that accept low credit scores.
✅ Matching you with a car loan that fits your situation.
✅ Avoiding unnecessary credit checks that lower your score further.

If your credit score is low but you need a car, don’t risk rejection! 🚗💨 A finance broker can help you get approved with the right lender.

If you have a low credit score but need a car loan, you still have options! A finance broker can match you with lenders who specialize in bad credit car finance.

 

DISCLAIMER

The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.

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All Your Questions Answered

What is a car loan and how does it work?

A car loan is a finance product where a lender provides funds for you to purchase a vehicle, which you repay over time with interest.

What’s the difference between secured and unsecured car loans?

Secured loans use the car as collateral, often leading to lower interest rates. Unsecured loans don’t, but usually have higher rates.

What loan terms are available for car finance?

Most car loans offer terms from 3 to 7 years. Find out what term suits you best.

How is interest calculated on a car loan?

Interest is based on the loan amount, term, and rate. Fixed-rate loans have predictable repayments, while variable rates can change.

Can I get a car loan for a private sale?

Yes, many lenders accept private sellers. You’ll need to provide extra documents.

Do government employees get lower interest rates on car loans?

Yes — many lenders offer better rates due to your stable income. Explore finance options for government employees.

Can I apply for a car loan while on probation?

Yes. Many workers are approved during probation.

What credit score do I need as a government employee?

A score of 650+ is ideal, but lower scores may still be considered.

Are corporate professionals eligible for low-rate finance?

Yes, especially if you're full-time with strong income.

Can I get car finance with a novated lease?

Yes, many government departments support novated leasing.

Can I get a car loan with no credit history?

Yes, it's still possible to get a car loan with no credit history.

What if I’ve been declined elsewhere?

A broker can help restructure your application for better results.

How do I check my credit score?

Use Equifax, Experian, or Illion for a free check.

Can I get finance if I have a current personal loan?

Yes, if your income supports both loans. A broker will assess your capacity.

What documents do I need to apply?

Typically: ID, payslips, and bank statements.

Can casual workers get car loans?

Yes, if you’ve worked consistently for 6+ months.

Can I apply if I’m self-employed with an ABN?

Yes. Consider a low-doc loan.

Can Centrelink be used as income?

Yes, when paired with PAYG income.

What’s the minimum income to qualify for car finance?

Most lenders prefer $30,000+ annually, but this varies.

Can I apply on a fixed-term contract?

Yes, especially if it’s government-backed.

Can I finance a used car?

Yes, most lenders allow used cars under 10 years old.

Can I get a loan for an SUV or family car?

Absolutely

Can I finance a caravan or motorbike?

Yes

Can I finance an EV or hybrid car?

Yes. You may even qualify for green car loan discounts.

Can I use my car for both work and personal use?

Yes you can.

What is a balloon payment?

It’s a lump sum due at the end of the loan term.

Can I make extra repayments?

Yes, many lenders allow this without penalty.

Can I pay off the loan early?

Yes — ask if there’s an early payout fee.

Is there a deposit required?

Not always.

What loan terms are available?

1 to 7 years is standard.

How long does approval take?

24–48 hours in most cases

Can I apply online?

Yes — most lenders and brokers accept online applications.

Is a broker better than going direct?

Often, yes. They can compare lenders for you.

Can I get pre-approved?

Yes — and it gives you better negotiating power at the dealership.

What happens after I apply?

Your documents are reviewed, and if approved, the lender issues funds to the seller.

Can I get a loan with a visa?

Yes, in some cases. see finance for visa holders here.

Do I need a driver’s licence to apply?

Yes, but learners may qualify with a co-applicant.

Can I apply with someone else?

Yes, joint applications are allowed.

Can I refinance my current car loan?

Yes — it can lower your repayments or get you a better rate.

Can I trade in my old car as a deposit?

Yes, many lenders accept trade-ins toward the deposit.

Can nurses get car finance?

Yes — see nurse-specific finance tips.

Can teachers apply while on contract?

Yes. Read how to get approved.

Do defence personnel get special car loan rates?

Yes, in some cases. Your job security is a major advantage.

Can FIFO government workers apply?

Yes — consistency in income matters more than job location.

Can I apply if I’m on maternity leave?

Yes, especially if you’re returning to work. Here’s how.

Can I use car finance to buy interstate?

Yes — just make sure the seller provides all required documents.

Can I finance a car from an auction?

Yes, but only through select lenders. Ask your broker first.

Will applying hurt my credit score?

Only if you apply to multiple lenders directly. Brokers help protect your score.

Can I get a car loan if I’ve been bankrupt before?

Yes — see bad credit car loan options.

What if I want to upgrade my car before the loan ends?

You can sell the car, pay off the loan early, or refinance.