Bad Credit Car Loans
Need a second chance? Get Savvy on your side and get approved.
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.
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.
The features and benefits of bad credit car loans
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).
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.
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.
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.
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.
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
The pros and cons of bad credit car loans
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.
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?
Income and employment
These factors are perhaps the most important in determining how suited you are to repaying the loan. Lenders will look for applicants whose income will comfortably cover the loan’s repayment requirements. As part of this, they’ll want to see that you’re able to maintain consistency in your employment and aren’t at major risk of finding yourself out of a job. They won’t approve a loan for a customer whose monthly income is eaten away substantially by their car loan repayments, for instance.
What our customers say about their finance experience
Further bad credit car loan questions answered
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.
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.