Bad Credit Personal Loans Guaranteed Approval

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Last updated on May 4th, 2022 at 03:09 pm by Bill Tsouvalas

Bad credit personal loans – guaranteed approval explained

Financing can be difficult to obtain if you’re in a tough position with your credit score. However, there are ways around a bad credit score when it comes to applying for a personal loan, which can open doors for you that may have otherwise been locked shut. However, is it possible to be guaranteed approval for your personal loan regardless of your credit score and borrowing history? Find out whether that’s the case, as well as any other bad credit financing options, in this guide.

Can I receive a bad credit personal loan with guaranteed approval?

The short answer is no – there are no reputable lenders in Australia who can guarantee approval of your bad credit personal loan application. This is because it’s against the law for any lender to grant loan funds and conditions to a person who they aren’t confident will be able to repay the entirety of the sum. This is in line with responsible lending obligations as outlined in the National Consumer Credit Protection Act 2009, which was introduced in the wake of the Global Financial Crisis to prevent lenders agreeing to deals that exploit vulnerable customers.

As such, it is important to bear in mind that you cannot and will not be guaranteed approval for your personal loan application by any lender, and those that do offer it are in breach of Federal laws. While this is the case, don’t think that this discounts you from getting any financing at all: there are still several avenues that prospective borrowers can take for their financing needs.

Can I still get a bad credit personal loan if I can’t get guaranteed approval?

Yes – although having bad credit may dash your chances of approval for a traditional personal loan, you’ll still be squarely in the frame for a bad credit personal loan. Bad credit personal loans more or less function in the same way as any other personal loan except with higher interest rates and fees. This is because lending to a borrower with bad credit is seen as a riskier proposition from the perspective of your lender compared to a customer with good credit. These are generally provided by smaller specialist lenders whose criteria tend to be more lenient than those of the big banks.

When processing bad credit personal loan applications, lenders will look at other aspects of your financial profile. Your credit score is the key indicator for traditional personal loans but, while it still plays a role in your application, bad credit lenders are more likely to also consider things such as your recent financial history and the reasons why your credit score is where it is now. This is crucial for borrowers who may have defaulted on past debts due to unforeseen circumstances out of their control, such as medical expenses or being laid off.

As mentioned, interest rates are far harsher with bad credit personal loans. While you may experience interest rate hikes of 5-10% compared to good credit loans, it can often be even more. There are some types of personal loan in the market which could potentially cost you an interest rate of 25-30% overall, which is a significant added cost. All of this comes down to what’s known as risk-based pricing, meaning a lender will set your interest rate according to the risk they perceive you to be at for defaulting on your loan. As such, it’s important to show as thoroughly as possible that you’re a safe prospect for your lender to cut down on your overall interest outlay.

Are there any alternatives to bad credit personal loans that have guaranteed approval?

No – there are still other options that you may wish to pursue if you don’t feel that a bad credit personal loan is right for you, but none with guaranteed approval. One such avenue is a bad credit small personal loan, which is essentially a personal loan limited to amounts between $300 and $5,000. This can be paid over a term as long as two years or as short as three months. These are more suitable for borrowers who are only looking for a small loan and want to pay it off quickly. Because these have significantly higher interest rates compared to their personal loan equivalents, they’re often not a suitable long-term fix.

Another option for borrowers is a guarantor personal loan. In this case, a borrower will enlist a close relation such as a parent or sibling to act as security for their loan should they become unable to service it. This means that, if you default, your guarantor will become responsible for the payment of your personal loan until its conclusion. While this can help you gain access to greater funds and lower your interest rates, it’s important to address the inherent risk of placing such a weighty financial commitment on someone else. This can potentially lead to disagreements and place strain on your relationship, which wouldn’t be the case if you were paying the loan on your own.

The pros and cons of bad credit personal loans


Allow you to get approved

For many bad credit borrowers, personal loans are one of the only viable options available to them when it comes to their financing needs.

Flexible repayment options

With repayments between one and seven years, you can have a say in how much you’ll be paying every week, fortnight or month

No security required

Unsecured bad credit personal loans allow you to forego placing one of your valuable assets as security in case you can’t fulfil your repayment commitments


Higher interest rates and fees

Because of the increased perceived risk to your lender, the amount you’ll have to pay in interest and fees by the end of your loan is likely to be significant

May not be approved for as much

If you have a patchy financial history, you may not be approved for as great an amount as you need with a bad credit personal loan depending on your circumstances

More complex application process

Because there are more variables to consider than just your credit score, you may find that the financing process takes longer to complete with some lenders

Frequently asked bad credit personal loan questions

How do I compare bad credit personal loans?

There are a number of factors that need to be compared when choosing between bad credit personal loans, including:

  • Whether to secure your loan or leave it unsecured
  • Whether your interest rate is fixed or variable
  • What your interest rate is and how much your fees cost
  • The maximum amount you’ll be able to borrow
  • The period over which you can repay your loan
Can I get a bad credit personal loan with guaranteed approval and no credit check?

You won’t be guaranteed approval on your personal loan as discussed earlier, but you do have access to loans with no credit check. Small personal loans are designed to be fast and easy from application to the funds hitting your account. However, these come with high interest rates, so you’re likely to pay a fair proportion of your loan extra in interest.

Does applying for bad credit personal loans affect my credit score?

Yes – applying for multiple personal loans at once will have a negative impact on your credit score, so it’s advisable to focus your attention on one at a time. However, applying and being approved for a personal loan can actually improve your credit score over time. If you’re able to pay off your loan promptly and regularly, your score will rise as your responsible debt servicing continues.

Can I receive a bad credit personal loan if I’m on Centrelink?

Yes – there are some specialist lenders who may be willing to grant your loan application by counting Centrelink benefits as a source of income. However, this is usually as a supplementary income rather than a primary or sole one, meaning bad credit personal loans may not be possible if you’re unemployed.

What bad credit personal loan criteria will I have to meet?

You’ll have to be at least 18 years of age and a permanent resident or citizen of Australia, first and foremost. Lenders also tend to have requirements relating to a minimum required income and employment status, although these vary depending on where you go. You’ll also have to show documentation relating to your identity, such as a driver’s licence and passport, as well as providing your phone and email details.

Can I pay off my bad credit personal loan early?

Yes – some bad credit personal loans have free extra repayments as part of their deal. These can be incredibly useful to borrowers, as paying more than the minimum can speed up the process of paying off your loan significantly and save on interest and fees in the process.

Is a credit card better than a bad credit personal loan?

It depends on how you use it. Credit cards aren’t suitable for larger expenses, particularly if you’ll struggle to pay them off. This is because of their very high interest rates and fees compared to loans, which will mount up if you don’t pay off your account inside 30 days. However, if you can do this, credit cards can be a great and flexible way to avoid having to pay interest. Be wary of its pitfalls, though.