Is It Possible to Get a Car Loan With Bad Credit?

By Angela Monroe - May 20, 2019

Is bad credit score getting in the way of your car financing applications? Don’t lose hope. You can still get a car loan with bad credit.

A good credit score is a valuable asset when applying for a car loan. It greatly increases your odds for approval and helps you negotiate favourable loan terms and low interest rates.

However, not having an impressive credit score doesn’t entirely stop you from getting car financing. While you may not qualify for a prime auto loan, which has lower interest rates and flexible repayment terms, you can get a bad credit car loan.

Car Loan for Bad Credit

A bad credit car loan is also called a subprime auto loan or a second chance car finance. Designed especially for borrowers with bad credit scores, this type of car financing disregards your credit records in exchange for a higher interest fee.

Often, lenders may also require you to pay a large down payment (around 25%) or use your car as collateral for the loan. This is to compensate for your being a “high risk” borrower, which means that you are likely to miss repayments or even stop paying the debt altogether based on your credit history.

You may also have to pay prepayment penalties if you choose to pay off the loan early.

How Can I Benefit From a Bad Credit Car Loan?

Aside from being able to get car financing despite your low credit score, a bad credit car loan can help rebuild your credit score as you make on-time payments. It also contributes to your credit mix, which counts for another 10% of your score. The more you leverage your credit rating, the more you can negotiate for better loan deals and save money.

What Are the Requirements?

Lenders that offer subprime auto loans have different requirements for borrowers. Generally, however, you will need to provide your most recent pay slips and income tax return to prove income. If you are an independent contractor or in a line of work where it’s hard to prove monthly income, you can present your latest bank statements. The statements must show a history of consistent cash deposits.

Is A Bad Credit Car Loan Good for Me?

If you need a vehicle in the soonest time possible but don’t have enough savings to make the purchase or a good credit score to qualify for a prime auto loan, a bad credit car loan may be perfect for you.  

Otherwise, you can choose to postpone your car loan plan to work on improving your credit score first. Build good credit by paying your bills and on time, paying off any outstanding debt, disputing credit report errors, and improving your bank account conduct.

Where Can I Get A Bad Credit Car Loan?

Before signing a bad credit car loan deal with any lender, don’t forget to shop around for rates. The requirements, loan terms and rate vary from one creditor to another. Compare the loan rates and terms to find the most affordable one possible.

However, limit your car loan shopping to a two-week period only. Loan inquiries negatively affect your credit score. As you inquire for loans, lenders access your credit reports. These instances are recorded by the credit reporting bureaus and added to your credit profile. However, inquiries made within a two-week period are only recorded as one.


Loans For People With Bad Credit offers bad credit car loan without charging outrageous interest rates. Providing different types of loans across Australia, the company has access to the best deals available from over 30 of Australia’s leading banks and lenders.

To know your latest credit score, fill out the Free Credit Check form. To get an exact quote for a bad credit car loan, call 1300 769 384.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.


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