💳 What Is a Default on a Credit Report?
A default is recorded on your credit file when you fail to pay a bill or loan repayment for 60 days or more. Defaults lower your credit score and can stay on your report for five years, making it harder to get a car loan.
Even if you’ve paid off the default, lenders may still see you as high-risk and decline your loan application. However, some lenders specialize in car loans for applicants with defaults.
🔍 How Do Defaults Affect Car Loan Approval?
Lenders assess the type, amount, and age of your default before deciding whether to approve your loan.
| Factor | How It Affects Your Car Loan | Can You Still Get Approved? |
|---|---|---|
| 📅 Age of Default | Older defaults have less impact than recent ones. | ✅ More likely if default is older than 2 years. |
| 💰 Default Amount | Large defaults increase risk in lender assessments. | ⚠️ Small defaults under $500 may be overlooked. |
| 🏦 Type of Default | Unpaid loans are worse than unpaid bills. | ❌ Loan defaults are riskier than utility bill defaults. |
| 💳 Paid vs. Unpaid Defaults | Paid defaults are less damaging than unpaid ones. | ✅ Some lenders approve if the default is settled. |
| 🔄 Multiple Defaults | More than one default reduces approval chances. | ❌ Harder to get approved without a specialist lender. |
If your default is recent, large, or unpaid, traditional lenders may reject your application, but specialist lenders can still offer car finance options.
✅ How to Get a Car Loan If You Have Defaults
If you have defaults on your credit report, take these steps to improve your approval chances:
1️⃣ Check Your Credit Report – Ensure defaults are correct and up to date.
2️⃣ Pay Off Unpaid Defaults – Lenders prefer applicants with settled debts.
3️⃣ Show Financial Stability – Prove you have steady employment and income.
4️⃣ Apply for a Secured Loan – Using the car as security can improve approval odds.
5️⃣ Use a Finance Broker – A broker can find lenders that approve applicants with defaults.
Even if you have defaults, some lenders focus on your current financial situation rather than past credit mistakes.
🚨 Can You Get a Car Loan If You Have Multiple Defaults?
Yes, but it’s more challenging. If you have more than one default, lenders may:
✅ Require a larger deposit to reduce risk.
✅ Offer higher interest rates due to poor credit history.
✅ Ask for proof of financial improvement, like consistent income and no recent missed payments.
A finance broker can help you find lenders who specialize in bad credit car loans and give you the best chance of approval.
🚀 Why a Finance Broker Can Help If You Have Defaults
If banks have rejected your car loan application due to defaults, a finance broker can connect you with lenders that approve bad credit applicants.
✅ Find lenders that approve applicants with paid or unpaid defaults.
✅ Help structure your loan for better approval chances.
✅ Prevent multiple rejections that damage your credit score further.
If your car loan was rejected due to defaults, don’t assume you’re out of options! 🚗💨 A finance broker can help you find a lender that will approve your loan despite past financial issues.
If your credit report has defaults, you can still get a car loan! A finance broker can match you with lenders who offer car finance even if you’ve had past defaults.
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.
