Short answer: If you're behind on a previous car loan, sort that out before applying for a new one. Missed payments stay on your credit file for 2 years, and a listed default stays for 5 years even once it's paid. Lenders will usually want to see the arrears cleared or under a formal arrangement, plus some months of on-time payments since.
What arrears look like on your credit file
| Record | When it appears | How long it stays |
|---|---|---|
| Repayment history information | Each month a payment is 14 or more days late | 2 years |
| Financial hardship information | Months you're on a hardship arrangement with the lender | 12 months, and it doesn't affect your credit score |
| Default | $150 or more overdue for 60+ days, after written notice | 5 years, shown as paid once cleared |
A new lender will see these records, and it'll also see your bank statements, which show whether car payments have been going out.
If you still have the car and you're behind
- Call your lender early. Ask about a hardship arrangement, such as a short payment pause, reduced payments or a longer term. Lenders have to consider hardship requests.
- Know your rights. Before repossessing, the lender generally has to send a default notice giving you at least 30 days to catch up. Moneysmart explains the process.
- Get free help. A financial counsellor on the National Debt Helpline (1800 007 007) can help you negotiate.
- Complain if needed. If you can't resolve it with the lender, you can go to AFCA.
If the car has been repossessed or sold
If the car was sold for less than you owed, you may still owe a shortfall plus costs. Ask the lender for a written statement of the sale and the balance. Agreeing a repayment plan, or paying it out, is usually the first thing a new lender will ask about. See what happens after a repossession.
Getting ready to reapply
- Get free copies of your credit report and check the arrears and any default are recorded accurately.
- Build a run of on-time payments on everything, including rent, phone and utilities.
- Be upfront with the broker or lender about what happened and why. A clear, short explanation, like a job loss or illness, and evidence that it's resolved, helps.
- Consider a cheaper car or a deposit to keep the new loan affordable.
- Don't apply with multiple lenders at once. Each application can leave an enquiry for 5 years.
How long to wait?
There's no fixed rule. Some specialist lenders may look at an application once arrears are cleared and you've had several months of clean conduct. Mainstream lenders often want more time, especially if there's an unpaid default. Our guide on how long to wait before reapplying covers this in more detail.
Cleared arrears on an old car loan? Tell us about your situation in about 60 seconds and a licensed broker will call you. No credit check to enquire.
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.
