Can You Get a Car Loan in Australia with Bad Credit?

If your credit history isn’t perfect, you might be wondering whether it’s still possible to get a car loan in Australia. The good news? Yes, you can get a car loan with bad credit — it just takes a bit more planning and the right lender to make it happen.

In this blog, we’ll explain what bad credit is, how it affects your car loan application, and how you can improve your chances of getting approved.


What Is Considered Bad Credit in Australia?

Your credit score is a number that reflects your borrowing history. In Australia, scores range from 0 to 1,200, with anything below 500 generally considered “bad credit.” This can result from:

  • Missed or late repayments

  • Defaults on previous loans or bills

  • Bankruptcy or debt agreements

  • Frequent credit applications in a short period

Even if you’ve had past financial troubles, many lenders are still willing to work with you — especially if your current financial situation is stable.


Can You Still Get a Car Loan with Bad Credit?

Yes, you can. While having bad credit limits your loan options, there are lenders in Australia who specialise in bad credit car loans. These lenders look beyond your credit score and consider other factors such as:

  • Your income and employment status

  • Your current expenses and financial commitments

  • How long it’s been since your last credit issue

  • Whether you can offer a deposit or a co-signer


How Does Bad Credit Affect Your Car Loan?

Having bad credit won’t automatically disqualify you, but it may:

  • Lead to higher interest rates – to offset the risk to the lender

  • Reduce your borrowing power – you may be approved for a smaller loan amount

  • Come with stricter terms – such as a shorter loan period or higher upfront requirements

That’s why it’s important to apply with lenders who understand your situation and offer realistic loan options.


Tips to Improve Your Chances of Approval

Check Your Credit Report

Start by requesting a copy of your credit report from Equifax or Experian. Make sure all the information is correct and dispute any errors you find. Knowing where you stand gives you a clearer idea of how to move forward.


Save for a Deposit

A deposit reduces the amount you need to borrow and shows lenders you’re financially committed. Even a small deposit (5–10%) can improve your chances and help reduce your repayments.


Choose a Realistic Car

Look for a car that fits your budget. Lenders want to see that your loan repayments will be manageable alongside your existing expenses. Choosing a modest, reliable vehicle is a smart move.


Demonstrate Financial Stability

Lenders are more willing to approve loans for borrowers who can show consistent income and stable employment. Full-time work, regular payslips, and low existing debts all help.


Work with a Car Loan Broker

A car loan broker, like Naked Loans, has access to a wide range of lenders — including those who are more flexible with bad credit. A broker can help match you with the right lender, prepare your paperwork, and improve your chances of getting approved without damaging your credit further with unnecessary applications.


What to Expect from a Bad Credit Car Loan

If approved, your loan may have:

  • A slightly higher interest rate

  • A shorter loan term

  • The option to refinance later once your credit improves

Make your repayments on time, and a bad credit car loan can actually help rebuild your credit score over time.


Drive Away with Confidence: Bad Credit Car Loans Are Possible with Naked Loans

So, can you get a car loan in Australia with bad credit? Absolutely. It’s not always easy, but with the right help and a bit of preparation, it’s definitely achievable. Whether you’re recovering from past financial issues or starting fresh, there are lenders out there who are willing to give you a second chance.

At Naked Loans, we specialise in helping Australians with all kinds of credit histories get behind the wheel. We compare lenders, negotiate terms, and guide you through the process — making it as simple and stress-free as possible.

Contact Naked Loans today and let us help you find a car loan that works for your situation — no matter your credit score.


Mitch Hills