Short answer: It's harder, but not always impossible. Most banks decline while a default is unpaid, and some specialist lenders will consider you, usually with conditions and at a higher cost. Paying or settling the default first opens up more options, although the listing itself stays on your file for five years.
What a default actually is
A credit provider can list a default when a debt of $150 or more is at least 60 days overdue and you have been notified. The listing stays on your credit report for five years from the date it was listed, even after you pay it. Once paid, it is updated to show a paid status, which lenders do take into account.
How lenders see paid and unpaid defaults
| Situation | Typical lender view |
|---|---|
| One small unpaid default, such as a phone or utility bill | Some specialist lenders may proceed, often if it is paid before or at settlement |
| Unpaid default with a finance company or bank | Treated as more serious. Options are limited |
| Paid default | More lenders will consider you, especially if it is more than 12 months old |
| Several defaults or recent missed payments | Usually specialist lenders only, with higher rates and fees |
This is a general picture. Every lender sets its own policy.
Steps before you apply
- Get your credit report. You are entitled to a free copy from each credit reporting body every three months. Check who listed the default, the amount and the date.
- Check it is correct. If the debt isn't yours, was already paid, or you weren't properly notified, you can ask the credit provider or credit reporting body to correct it. There is no charge for this. Moneysmart explains the process.
- Contact the creditor. Paying in full or agreeing a settlement gets the status updated to paid. Ask for written confirmation.
- Show stable income and conduct. Recent payslips and three months of tidy bank statements help offset an older mistake.
- Don't spray applications. Each application can leave an enquiry for five years, and several rejections look worse than one default.
If you need a car before the default is paid
A secured loan on a modest, reliable vehicle is the most common route. Some lenders may ask for a deposit or a guarantor, or require the default to be paid from the loan at settlement. Be wary of anyone who says they can remove a correct default for a fee. Accurate listings stay for the full five years, and "credit repair" services often charge for things you can do yourself for free.
Think about the whole cost too. Higher-risk loans carry higher rates and fees, so compare the total repayable and the comparison rate, not just the weekly figure.
Default on your file? Tell us about your situation in about 60 seconds and a licensed broker will call you. No credit check to enquire.
Related guides
- Phone contract defaults and your car loan
- Car finance after settling a debt
- Secured car loans for poor credit
General information only. This isn't financial advice. Finance the Ride is a referral service and doesn't hold an Australian Credit Licence. Last reviewed September 2026.
