Can I Get a Car Loan With Bad Credit in Australia?

Quick Answer: Yes, you can get a car loan with bad credit in Australia through specialist lenders — but rates run from 18–30%+ p.a. compared to 7–10% for clean-credit borrowers. On a $25,000 car loan over 5 years, the difference between 9% and 25% p.a. is approximately $15,900 in extra interest. If the defaults on your file were listed in breach of the Privacy Act 1988, professional removal in 30–90 days can unlock mainstream car finance at dramatically better rates.

You need a car. Your credit isn't perfect. The question is whether you accept the specialist rate, or whether a short wait to fix your file saves you enough to make it worthwhile.

The answer depends on how urgently you need the vehicle and whether your defaults can be removed. This guide gives you the full picture.

Car Loan Options With Bad Credit in Australia

Car loans are secured — the vehicle itself is the security — which is why they're more accessible than unsecured personal loans for bad credit borrowers. But the rate penalty is still severe.

The True Cost of a Bad Credit Car Loan

The difference between a 9% and a 26% rate on a $25,000 car loan is $12,600 in additional interest over 5 years. The car is the same. The financial damage is entirely different.

Real Case Study: Kevin, Cairns — Waited 48 Days, Saved $13,400

Kevin, 39, a plumber from Cairns, needed a $28,000 ute for his business. He'd been quoted 24.9% p.a. by a specialist car finance company after being declined by two mainstream lenders. He was prepared to sign.

Before he did, his accountant suggested a quick credit check. His Equifax score was 447. His file showed a $720 default from an energy provider — listed two and a half years earlier — and four hard enquiries from his two recent loan rejections (two applications, two enquiries each).

His ACS assessment found the energy provider had listed the default while Kevin had a formal complaint pending with the Energy and Water Ombudsman Queensland. Under the Credit Reporting Code, the listing was unlawful.

We challenged it. The energy provider removed the default in 35 days.

Result: Kevin's Equifax score moved from 447 to 694 in 48 days. He reapplied for the ute loan through his bank's business arm. Approved at 8.9% p.a. On $28,000 over 5 years, the saving compared to the 24.9% specialist quote was approximately $13,400 in interest. His ute arrived 48 days later than it would have at the specialist rate — and his business was $13,400 better off for it. He only paid when we succeeded. Subject to individual assessment; results may vary.

How to Get a Car Loan With Bad Credit — Step by Step

1. Check all three credit reports before approaching any lender — Equifax, Experian, Illion
2. Get a free credit assessment — 24 hours to know if defaults can be removed
3. If removal is viable, pursue it first — typically 30–90 days for unlawfully listed entries
4. If urgent, approach a specialist broker — access lenders not visible on comparison sites; find ASIC-licensed brokers at asic.gov.au
5. Avoid dealer finance unless comparing the rate explicitly — it's typically higher than specialist lender rates despite appearing convenient
6. Apply to one lender at a time — multiple simultaneous applications add enquiries and worsen your position

Frequently Asked Questions

Can I get a car loan with bad credit in Australia? Yes — specialist and non-bank lenders will approve car loan applications with active defaults or low credit scores, but at rates significantly higher than mainstream lenders offer. If your defaults were listed without proper notice under the Privacy Act 1988, removing them first typically takes 30–90 days and can save thousands in interest.

What credit score do I need for a car loan in Australia? Mainstream banks and credit unions typically want an Equifax score of 600–650 for secured car finance. Specialist bad credit lenders consider scores below 450. The presence of an active default is often a harder barrier than the score itself — many lenders decline any application with an active default regardless of score.

Can I get a car loan with a default in Australia? Yes — specialist car finance lenders accept applications with active defaults. The trade-off is a significantly higher interest rate. If the default was listed in breach of the Privacy Act 1988 or Credit Reporting Code, it can potentially be removed in 30–90 days — unlocking mainstream rates and saving thousands in interest over the loan term.

Is dealer finance a good option for bad credit car loans? Dealer finance is convenient but typically expensive. Dealers earn commission on finance products and tend to offer rates at the higher end of the spectrum for bad credit borrowers. Always get an independent finance quote to compare — a specialist broker with access to wholesale rates can often do better.

How long does a car loan approval take with bad credit in Australia? Specialist bad credit lenders can approve car loan applications in 24–48 hours once documentation is provided. Mainstream lenders take 3–7 business days typically. If you're pursuing credit repair first, add 30–90 days for the removal process before applying.

Can I refinance my car loan if my credit improves? Yes — if you took a car loan at a high rate while your credit was impaired, and you've since improved your score (through professional removal or rebuilding), you can apply to refinance the remaining balance at a better rate. The saving depends on the remaining term and the rate improvement. Check for early exit fees on your current loan before proceeding.

Get a Car Loan Rate That Reflects Your Real Risk

Don't accept a specialist rate if there's a chance your file can be cleaned first. A free assessment takes 24 hours and costs nothing to find out.

Australian Credit Solutions is ASIC-licensed (ACL 532003), lawyer-led by Principal Solicitor Elisa Rothschild, and has helped over 5,000 Australians access better car finance since 2014. No Win No Fee. 98% success rate on accepted cases.

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Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

Related reading: Bad Credit Car Loans → | Default Removal Services → | Improve Your Credit Score →