How to Get a Car Loan with Bad Credit in Australia: 7 Lenders That Say Yes (2026)
If you’re struggling with a bad credit score, getting a car loan in Australia can feel like a daunting task. But don’t worry, there are ways to secure financing even with a less-than-perfect credit history. Explore our car loans page to see how MC Mortgage Solutions can help you get behind the wheel. In this article, we’ll explore the 7 lenders that approve bad credit car loans, explain what bad credit means, and give you tips to improve your approval chances in 2026.
What Is Considered “Bad Credit” in Australia?
Before you apply for a car loan with bad credit, it’s important to understand what constitutes bad credit. In Australia, your credit score typically ranges from 0 to 1,000, with higher scores reflecting a healthier credit history. Here’s a breakdown of the score ranges and what they mean:
- Excellent: 800–1,000
- Good: 700–799
- Average: 500–699
- Below Average: 300–499
- Bad Credit: Below 300
If your credit score falls below 500, you’re considered to have bad credit. This means lenders may view you as a high-risk borrower, making it more difficult to secure a car loan. However, don’t let this discourage you there are still options available.
Credit Score Requirements by Lender
Different lenders have different criteria for bad-credit car loans. While most traditional banks may set a high threshold for approval, many specialist lenders are more flexible with applicants with bad credit. See how working with a broker compares in our mortgage broker vs bank guide. Here’s an overview of how credit score requirements vary by lender:
- Traditional Banks: Banks like Commonwealth Bank or ANZ generally require a credit score of 600+ for car loan approval, though some may offer loans with a bad-credit premium.
- Specialist Lenders: Car loan specialists like Plenti or Latitude Financial Services may approve loans for people with a credit score as low as 300, but expect to pay higher interest rates to offset the risk.
- Credit Unions: Often more community-focused, credit unions may be more willing to work with individuals with bad credit, but their approval criteria can vary widely.
7 Lenders Who Approve Car Loans with Bad Credit
While getting a car loan with bad credit might not be easy, it’s not impossible. Here are 7 lenders that say yes to applicants with bad credit in Australia:
1. Plenti (formerly RateSetter)
Plenti offers a range of personal car loans for individuals with bad credit. They focus on flexible loan terms, and while they do charge a higher interest rate for bad credit, they have a streamlined application process that helps you get approved faster.
2. Latitude Financial Services
Latitude offers bad credit car loans with guaranteed approval for individuals with poor credit. They also offer a secured loan, which may increase your chances of approval if you’re willing to use your car as collateral.
3. Money3
Money3 specialises in subprime car loans for individuals with bad credit. Their flexible approval process considers factors beyond just your credit score, including your ability to repay the loan.
4. Pepper Money
Pepper Money offers tailored bad credit loans with competitive rates for people who have had past credit issues. They look at your overall financial situation, not just your credit score, when making lending decisions.
5. CitiBank
Although Citibank usually has higher credit score requirements, it is flexible with individuals with bad credit and offers secured car loans for those with low credit scores. A co-signer may also increase your approval chances.
6. FlexiGroup
FlexiGroup offers bad credit car loans through its Peer-to-Peer lending platform. Their focus is on flexibility, and they cater to people who may not qualify for traditional loans from mainstream banks.
7. OneMain Financial
OneMain Financial specialises in high-risk loans for individuals with poor credit. They offer personal car loans at higher interest rates but also provide quick approval, making them a good option for those who need a car loan fast.
How to Improve Your Chances of Approval with Bad Credit
Even though securing a car loan with bad credit may seem tough, there are several strategies you can use to improve your chances of getting approved:
- Check Your Credit Report: Ensure it’s accurate. Sometimes errors can negatively impact your score, and correcting them can boost it.
- Apply for a Secured Loan: Secured loans, where you use the car you are buying as collateral, often offer better approval odds and lower interest rates. If you default on the loan, the lender can seize the car, thereby reducing its risk. A larger deposit also lowers the loan-to-value ratio (LVR), reducing the lender’s risk. Learn more about how LVR works in our guide what is loan-to-value ratio (LVR)?
- Consider a Co-Signer or Guarantor: Adding a co-signer or guarantor, someone with better credit who agrees to take responsibility for the loan if you can’t pay, can significantly improve your chances of approval. Read our detailed guide on how guarantor home loans work to understand the responsibilities involved.
- Save for a Larger Deposit: The larger your deposit, the less you’ll need to borrow, and this can make lenders more willing to approve your loan.
- Provide Proof of Stable Income: Lenders want to know that you can repay the loan. Providing proof of a stable income or a steady job can increase your chances of approval, as it shows your ability to meet repayments.
Interest Rates on Car Loans for Bad Credit
One of the most important aspects to consider when applying for a car loan with bad credit is the interest rate. While individuals with poor credit may still qualify for a loan, they typically face higher interest rates compared to those with good credit.
For example, a standard car loan might come with an interest rate as low as 5–7% for borrowers with good credit, but if you have bad credit, the rates can jump to 12–20% or more. Be prepared for these higher costs, and make sure you’re comfortable with the total repayment amount over the life of the loan. Discover 5 reasons you may be able to get a lower interest rate and how to negotiate better terms.
Secured vs. Unsecured Car Loans
When looking for a bad credit car loan, you’ll often have the option between a secured and an unsecured loan.
- Secured Car Loans: These loans are backed by collateral (usually the car you’re buying). Because the lender has something to claim if you default, secured loans are often easier to get approved for, even with bad credit. However, if you fail to make payments, the lender can repossess your car.
- Unsecured Car Loans: These loans don’t require collateral, making them riskier for lenders. As a result, unsecured loans often come with higher interest rates and stricter eligibility criteria.
Credit Repair While Applying for a Car Loan
Applying for a car loan with bad credit is a good opportunity to begin improving your credit. You can work on repairing your credit score while going through the loan process by:
- Paying off existing debt to lower your credit utilisation ratio.
- Making timely payments on any current obligations to avoid late payments.
- Avoid applying for multiple loans, which can negatively affect your score.
Demonstrating that you are actively working on improving your credit can help your loan application. See the 3 reasons home loan applications are declined to avoid the most common pitfalls lenders look out for.
MC Mortgage Solutions’ Process for Car Loans with Bad Credit
At MC Mortgage Solutions, we specialise in helping individuals with bad credit secure car loans with favourable terms. Not sure if a broker is right for you? Read should I use a broker for a mortgage? to find out how we work on your behalf. Our process for bad credit car loans is simple and transparent:
- Application: Complete an easy online application, providing necessary details such as your income, employment history, and credit history.
- Assessment: Our team will assess your application based on your unique financial situation, not just your credit score.
- Approval: Once approved, we’ll provide you with a loan offer, including terms and rates tailored to your needs.
- Get Your Car: Once you accept the offer, the funds will be transferred, and you can use them to buy the car you need.
FAQs
Yes, it is possible to get a car loan with bad credit in Australia. Many specialist lenders offer bad credit car loans. However, expect higher interest rates and stricter approval criteria.
In Australia, a credit score below 500 is typically considered bad credit. If your score is in this range, you may face difficulty getting approved, but there are still options available with higher interest rates.
To apply for a car loan with bad credit, fill out an application with a lender specialising in bad credit loans. Be prepared to provide details about your income, employment, and existing debts.
Yes, some lenders will approve car loans with a credit score below 500. However, your interest rates will likely be higher, and the terms of your loan might be less favourable. Consider offering a larger deposit or using a co-signer to improve your chances.
Guaranteed approval car loans for bad credit are loans where the lender approves your application regardless of your credit score. However, these loans often come with higher interest rates and may require a co-signer or collateral (such as the car itself).
Yes, many lenders offer co-signer or guarantor options for individuals with bad credit. Adding a co-signer with better credit can significantly improve your chances of loan approval and might lower your interest rate.
A secured car loan requires you to use the car as collateral. This often results in lower interest rates and easier approval. An unsecured car loan doesn’t require collateral, but it usually comes with higher interest rates for those with bad credit.
Yes, it’s possible to get a car loan with bad credit if you are self-employed. Lenders may ask for additional documentation, such as tax returns or financial statements, to verify your income and ensure you can make regular payments.
Before applying for a car loan with bad credit, consider your repayment ability, interest rates, and loan terms. You may want to save for a larger deposit, apply for a secured loan, or find a co-signer to increase your chances of approval.
Yes, applying for multiple car loans within a short period can hurt your credit score further and make lenders view you as a risky borrower. It’s best to apply with a lender that specialises in bad credit loans to improve your chances of approval without negatively impacting your credit.
Conclusion: Your Path to Car Ownership with Bad Credit
Getting a car loan with bad credit in Australia may seem challenging, but it is entirely possible with the right approach. By choosing the right lender, understanding the impact of your credit score, and improving your chances of approval, you can secure the financing you need. Whether you opt for a secured loan or need a co-signer, 7 lenders offer opportunities for bad credit applicants in 2026. Don’t let your credit history hold you back contact MC Mortgage Solutions today and take the first step toward car ownership.
