Bad Credit Car Loans

Need a second chance? Get Savvy on your side and get approved.

No obligation. It won't affect your credit score.

Last updated on July 8th, 2022 at 04:09 pm by Thomas Perrotta

Need a second chance car loan? We can help

Bad credit is OK

Do you have a bad credit rating? Have you been rejected for car loans? You deserve a second chance! At Savvy, we can help you achieve your dream of owning a new or second hand car, even if you have bad credit.

Our car loan consultants are experts at getting those tricky deals approved. We can also advise you on steps to take to improve your credit rating and have you on your way to owning your car in no time.

Trusted brand

Savvy has helped thousands from across the country secure financing when banks and other financiers were unable to. Savvy partners with a range of specialist lenders that are prepared to look ‘outside the box’ for the right customer. 

Our consultants have many years of experience, they take the time to understand all the details of your profile in order to deliver high approval rates. 

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The features and benefits of bad credit car loans

Finance up to 100% of your car’s value

You’re not required to put forward a sizeable deposit towards your car loan, with lenders able to approve financing for up to 100% of its cost (and sometimes more).

Flexible lenders who understand your situation

We’re partnered with specialist lenders who can work with you, even if you’ve struggled with credit in the past; it shouldn’t be a barrier to buying your new car.

Repay at your own pace

You can choose the length of time you take to repay your car loan, with terms available as short as one year up to several giving you the option to repay your loan on your terms.

Fixed interest rates

Car loans come with fixed interest rates, so you’re not only protected from rates rising but also can take advantage of the certainty and stability fixed repayments bring.

Buy brand-new or used privately

You’re not restricted to brand-new vehicles at the dealership, with used cars bought either from a car yard or private seller across the country able to be financed by your lender.

Diverse income accepted

You can count multiple income sources towards your car loan payments, whether you work full-time or a combination of part-time, casually or run your own business.

Why more bad credit customers trust Savvy

How to apply for a bad credit car loan with Savvy

Our Process

Apply online with Savvy

You can fill out a quick quote online with Savvy and, once you send through your formal application, your Savvy consultant can get to work.

Let your consultant do the heavy lifting

Your consultant will find the best finance option for you from our range of specialist lenders and prepare your application to suit their requirements once you give the all clear.

Sign your loan contract and buy your car

You'll be notified once your application is formally approved and sent a loan contract to sign, after which the funds can be sent to your seller and the car is yours.

The pros and cons of bad credit car loans

PROS

Make your dream car purchase a reality

Not having all the funds you need to purchase your car upfront doesn’t have to be an issue with a car loan, as it can bring vehicles which you otherwise wouldn’t have bought into view.

Build positive credit

Making your repayments on a consistent basis across your car loan will help you build your score back up, which could help you with better finance deals in the future.

Budget accurately with fixed repayments

Because car loans come with fixed interest, you can be safe in the knowledge your repayments won’t increase in size and can budget with more certainty into the coming months.

Pay nothing upfront

There’s no need to pay any form of deposit if you don’t wish to, with your car loan doing the work for you in covering its cost and enabling you to space out your repayments comfortably.

CONS

Higher interest and fees

Car loans already come with interest and fees attached but you’re likely to pay more if your credit isn’t the best, which will cost you more than your car’s purchase price.

More documentation required

Because lenders want to be certain that you’re capable of supporting your loan’s repayments, you’re likely to be asked for more documentation to prove this.

What factors increase your chances of approval?

Further bad credit car loan questions answered

How do I apply for a bad credit car loan?

You can get a quick quote with Savvy and get the wheels in motion on your car loan application today. Once you submit your quote and application, your consultant can get to work finding you the best and most affordable loan to suit your needs. They’ll guide you through the process from start to finish, ensuring you meet all the criteria required to qualify for financing.

How long does the application process take?

The speed of your application will depend on a number of variables pertaining to your borrowing profile, such as your recent credit record, income, employment, vehicle you wish to buy and more. We work with specialist lenders who can have applications approved and funded in as little as 48 hours.

How can I refinance a car loan with bad credit?

If you have a bad credit car loan and have been keeping up with repayments and obligations and your credit score has improved sufficiently, you may be able to look around to refinance your car loan with other lenders. You’ll need to prove you’re in a better financial position than you were when you took out your loan in the first place. One other way is to trade in your current vehicle and pay out the bad credit car loan in full, although this will cost you an early repayment fee to do so.

What is a Part IX debt agreement?

Part IX Debt agreement is a formalised, legally-binding agreement between yourself and your creditors to pay back debts.

Can I get bad credit car loan with unpaid defaults?

Yes – it is possible to get a bad credit car loan with unpaid defaults. We work with lenders who can look past defaults and approve your application if you’re able to show you’re comfortably able to afford the repayments on the loan you’re applying for. You’ll stand a much better chance of loan approval if you pay any previous defaults prior to applying, though.

Can I get finance pre-approval?

Yes – you can get finance pre-approval so you know exactly how much you can spend on a car and gain a stronger hand when negotiating on price with your dealer or seller.

Can I obtain bad credit car financing from dealerships?

No – even with dealerships generally not offering you the same flexibility and choice that you’d receive when applying with Savvy, there generally aren’t any bad credit options available through this method of finance.

Can be guaranteed for bad credit car loan approval?

No – each lender will assess your application differently, so there isn’t any way to guarantee you’ll be approved. All you can do is try to make yourself as appealing an applicant as possible, which will go a long way towards helping you get approved.

Are no credit check car loans available?

No – all lenders will conduct a credit check. You shouldn’t be too concerned about a credit check when you look at a bad credit car loan, as lenders are already anticipating a patchy credit history. There are limits to what lenders will accept, though, but there are many lenders that are very flexible when reviewing one’s credit file. When you speak with your consultant, they’ll review your file to make sure that you application is sent to the right financier. There are some rent to own organisations which may not require a credit check, but all financiers will.

Can a bad credit car loan correct your credit?

It can – car loans can be an instrument to repair your credit. Demonstrating you’re responsible with your finances by making all your repayments on time and avoiding any defaults will see your credit score improve over time. It may take years, but paying off a loan on time and in full will show other lenders you are a lower risk. In some cases, your risk profile may go down enough that you can refinance your car loan at a more favourable rate.

Bad credit car loans explained

What is a bad credit car loan?

As the name suggests, a bad credit car loan is a finance product designed to help borrowers pay for the purchase of their next car, even if they’ve struggled with credit in the past. A bad credit score may come about for a variety of reasons, but the specialist lenders who offer these products are more focused on your ability to repay your loan in the here and now. Bad credit car loans aren’t offered by all financiers, but there are still many lenders who can work with you to help you purchase the car you’re looking for.

You can take the guesswork out of applying for car finance by submitting your application through Savvy. We’re partnered with specialist lenders from around the country to give our customers the best chance of approval, even with a bad credit score. Once you apply, your dedicated consultant will get to work finding the most suitable offer for you with the greatest chance of success and help prepare your application so it can be tailored to their requirements.

How do I qualify for a bad credit car loan?

When it comes to the qualification criteria for car loans, not all lenders will enforce the same requirements. However, these tend to follow the same broad strokes across the board, even if there are a few minor differences from financier to financier. The criteria you’ll be required to meet include the following:

  • You must be 18 years of age or older at the time you apply for financing
  • You must be an Australian citizen, permanent resident or valid visa holder to qualify
  • You must be employed in a stable job, either full-time, part-time (three months or more), casual (six months or more) or self-employed (at least one to two years)
  • You must be earning a consistent income (typically of at least $26,000), which can come from multiple sources
  • If you receive income from Centrelink, it mustn’t be from Youth Allowance, ABSTUDY, Austudy or JobSeeker (on its own)
  • If you’re buying a car for your business, it must be used for commercial purposes at least 50% of the time
  • Your car must be no older than 20 years at the point of purchase (older vehicles can be bought with an unsecured personal loan)

On top of these factors, you’ll also be required to supply a set of documents so your lender can verify your financial situation. These will typically include:

  • Your last two payslips
  • Recent Centrelink income statements (if applicable)
  • 90 days of bank statements
  • Your driver’s licence
  • Your Savvy application form
  • A signed consent form and credit guide (obtained from your consultant)
  • Information on your ongoing expenses, liabilities and any assets

Who can apply for a bad credit loan with Savvy?

Bad credit car finance is designed to cater to a wide range of people who may not otherwise qualify for conventional car loans. If you fit into any of the following categories, a bad credit car loan may be the best option for you:

Customers with defaults

Defaults on your credit file can cut off finance options from many of the bigger banks and can be difficult to overcome, as they stay imprinted in your history for five years. However, we partner with lenders who are willing and able to work with your situation. Our consultants know the product market, so we can help you find the right deal to fit with your profile.

Customers who want an older/used car

Because most car finance requires your car to be used as security to back up the loan, lenders can be picky when it comes to the types of cars they accept as collateral. Many major lenders will refuse to finance cars older than ten years. Our lenders are flexible, with some offering finance on vehicles up to 20 to 25 years old and others not capping their car age limit at all.

Customers with little to no borrowing history

To a lender, no credit history is about as good as having a bad one. Because they have no indication of how reliable you are as a borrower, most will swiftly reject your application. However, even if you haven’t borrowed before, our lenders can approve your car finance application if you can show us that your income is sufficient to comfortably handle repayments.

Customers who earn income via Centrelink

Borrowers whose Centrelink benefits make up a more substantial percentage of their income also struggle when it comes to getting approved for car finance. Our lenders are willing to work with customers who have alternative forms of income like Centrelink, especially those who derive up to, or more than, half of their income through benefit payments.

Casual employees and those under short-term employment

Most mainstream lenders will require applicants who work casually to have worked with the same employer for at least 12 months consistently, which isn’t always the case. Specialist lenders don’t impose the same restrictions on employment and are more open to accepting shorter-term employment in their car loan applications.

Self-employed customers

While part of conventional car loan application requirements typically involves supplying employment contracts and payslips, our specialist lenders can assist self-employed applicants, who may not have their financials up to date, explore their low doc finance options.

Customers who are ex-bankrupt or in a Part IX

Discharged bankrupts and those under a Part IX debt agreement face an uphill battle to access any sort of finance, including car loans. Our lenders are generally more interested in your current ability to service a loan than your past, so one of our consultants will lead you through the process and find the right finance deal to help you buy your car.

How much can I borrow?

The amount you’re able to borrow to purchase your car will be shaped by several factors. Bad credit finance is generally capped at $100,000, meaning you’d have to put forward a deposit to make up any difference in most cases. However, this maximum doesn’t apply to everyone. The main factors which can impact the amount your lender approves you for include:

  • Your income: the amount you earn will have a direct effect on the amount your lender will be comfortable approving you for. The more you earn, the more money you’re likely to have available each month to put towards your loan repayments. For instance, someone who earns $6,000 per month is more likely to be approved for a loan with repayments of $1,500 than someone with a monthly return of $3,000.
  • Your expenses: it’s not just your income which is relevant, though, but also what proportion of your funds go towards your expenses each month. Lenders will want a fairly detailed breakdown of your ongoing costs, such as food, rent, utilities, school fees and any other loan or credit card debts which remain outstanding. This is to ensure you aren’t put at too great a risk of default by further reducing your disposable income.
  • The value of your car: of course, the amount you’re approved for will directly correlate to the value of the car you’re buying. For instance, if you’re looking to purchase a $30,000 car, you won’t be able to be approved for a $45,000 loan, as these funds must only be used for the purchase of your vehicle (as well as potentially enabling other on-road costs such as insurance and rego to be included).
  • Your interest and fees: the addition of interest and fees will be factored into your ability to repay your loan. Each of these will be added to your monthly repayments, meaning the higher they are, the less room you’ll have to pay down the cost of the car itself. A lender may decide that you have a borrowing power of $37,500 but may only enable you to purchase a $30,000 car due to the other costs involved in your loan.

Are there bad credit car finance products designed for businesses?

Yes – car finance isn’t just available to individuals with a less than perfect credit score but businesses as well. Your business might’ve run behind on bills or loan payments in the past or it may simply be down to the fact that you’ve only just started up the business in the last few months and you haven’t built up enough positive reporting to work your way up to a good score. Whatever the reason may be, you can access commercial vehicle financing with bad credit.

The main option available to businesses with bad credit looking to purchase a car or equipment is a chattel mortgage. This is similar in structure to a standard car loan: the vehicle acts as security for the finance agreement and is owned by the buyer from the outset of the loan, paying off the principal with interest and fees over a period of one to seven years. However, there are several claimable costs on chattel mortgages which can save your business thousands, namely GST on the purchase, interest on the loan and depreciation. You can discuss your bad credit commercial finance options with your Savvy consultant.

How can I save money on my bad credit car loan?

There are many ways you can go about reducing the cost of your bad credit car finance deal. It’s important to know the areas in which you can minimise your overall outlay, as you can potentially save hundreds of dollars, if not more, over the course of your loan term by doing so. Some of the main methods of cutting down on the cost of your car loan include:

  • Choose a shorter loan term: because of the way interest is calculated, you stand the best chance of reducing the cost of your car loan by opting for a shorter term. Your interest is calculated daily and charged on each instalment based on your outstanding loan principal. If you decide on a shorter term, your debt owing will reduce at an increased rate, as will the interest you’re required to pay. Shorter terms come with higher instalments, but they can help you save overall.
  • Put forward a deposit: if you have the ability to pay a deposit towards the purchase of your vehicle, you can automatically reduce its overall cost. This is because a deposit essentially acts as an interest-free contribution which reduces the required size of your loan. For instance, if you were to pay a $3,000 deposit on a $50,000 car loan over five years at 15% p.a., you’d save almost $2,000 compared to a 100% loan.
  • Take steps to improve your score: if you have the ability to pay down any outstanding debts prior to taking on your car loan or reduce the limits on your credit card (as well as get rid of any you don’t need), you could improve your credit score and potentially reduce the interest rate and fees you’re offered. While this won’t necessarily mean the difference between a good and bad rate, even a small difference could save you hundreds or more.