Bad Credit Used Car Loans
Whether you’re purchasing a used car from a dealership or a private seller, finding the right loan when you have bad credit is essential.
Buying used instead of new is one of the easiest ways to save money on a car, but it can come with a few extra hurdles when you’re trying to finance it. Older vehicles, higher kilometres and private sales all change how a lender looks at your application in ways that simply don’t come up with a brand-new car.
That doesn’t mean bad credit used car loans are harder to get, though; just that there are a few more boxes to tick. It’s worth knowing what these are, both for yourself and for your vehicle, before you apply for your bad credit used car loan.
Can I get a used car loan with bad credit?
Yes, bad credit doesn’t shut the door on car finance. Although there’ll be fewer options among mainstream lenders, there are specialist financiers out there that are set up to work with you, rather than reject you outright. These lenders look at factors beyond your credit score, instead focusing more on your ability to repay your loan.
Used cars can also be easier to finance than new ones for those with bad credit, as their purchase price is lower. Smaller loan amounts mean less risk for the lender, so they’re often more willing to approve applications for these cars. However, you’ll need to make sure the used car you choose ticks all the right boxes to be approved.
Which used cars can I finance with a bad credit loan?
Lenders set a few standard criteria for the vehicle itself before approving a bad credit used car loan. These typically include:
- Vehicle age: most lenders cap finance at 10 to 15 years old at the end of the loan term, though we work with lenders who can approve loans for cars 20 years or older.
- Kilometres travelled: some specialist bad credit lenders place a cap on the total kilometres allowable on the odometer for used cars. There are plenty of others that don’t, though.
- Condition: the car needs to be roadworthy and in reasonable mechanical condition. Some lenders will require an inspection or valuation before approving finance.
- Vehicle type: standard passenger vehicles are the easiest to finance. Modified cars, imports and some commercial vehicles may need a specialist lender.
Meeting these criteria doesn’t guarantee approval on its own, but choosing a car that fits within them gives your application the best chance of success.
How much can I borrow for a bad credit used car loan?
How much you can borrow depends on a mix of factors, including:
- Income and expenses: your ability to comfortably make repayments is the main factor lenders assess.
- Existing debts: other loans or credit commitments reduce how much you can service.
- Loan-to-value ratio: lenders compare the loan amount to the car’s value, so a lower-value or older used car generally means a smaller maximum loan amount.
- Deposit size: a larger deposit reduces the loan-to-value ratio, which can make approval easier and open up a wider range of lenders.
- Lender loan limits: different lenders will have different minimum and maximum loan amounts, so you may be able to borrow more with one than another.
Some specialist lenders will still approve loans with little or no deposit, but applicants with bad credit may be required to pay one in certain cases.
Can I get a loan from a dealer or private seller?
Yes, bad credit used car loans can generally be used to buy from either a dealer or a private seller, though the process looks a little different depending on which one you choose.
Buying from a dealer is usually more straightforward. Dealers are familiar with the finance process, and many will help coordinate paperwork directly with your lender. Cars sold by licensed dealers also come with warranties, which can work in your favour when a lender assesses the vehicle.
Private sales can still be financed, but lenders often ask for a few extra steps to protect themselves against risk, such as:
- A PPSR check: confirming the car isn’t stolen, written off or still owned by a previous financier.
- A roadworthy certificate: proving the car meets safety standards, since there’s no dealer warranty backing the sale.
- An independent valuation: making sure the agreed price reflects the car’s actual market value.
These extra checks protect you as much as the lender, since they help confirm you aren’t paying for a car with hidden problems.
How to apply for a bad credit used car loan
-
1
Complete the application form
Fill out our online application with your details, your finances and how much you're looking to borrow for your used car.
-
2
Submit your documentation
We'll ask for documents to verify your identity and current financial situation.
-
3
Speak to your broker
Once we have everything we need, your broker will look at your options and call you to talk them through.
-
4
Pick out your car
If you haven't already found one, our in-house car broker can help you find a used car through our network of dealerships.
-
5
Submit the application to your lender
Once you're happy with your options, your broker will prepare your application for formal assessment.
-
6
Approval and settlement
Formal approval can happen within one business day, and we'll handle settlement for you.
-
7
Enjoy your used car purchase
After that, all that's left to do is sign off and pick up the keys.
Why us?
Fast loan approval
We work hard behind the scenes to match you with a suitable lender and have your loan approved and funded in as few as 48 hours.
100% online
Where ever you are across Australia, you can apply for a bad credit car loan using your laptop or even a smartphone.
Trusted brand
For more than a decade, we've been helping borrowers with bad credit get approved for their car loans across Australia.
Bad credit used car loan eligibility and documentation
Eligibility
- You must be 18 years of age or older
- You must be an Australian citizen, permanent resident or eligible visa holder
- You must be employed and earning a stable income that supports your car loan payments, which can start from as little as $480 per week
- You mustn't currently be bankrupt
- Your chosen car must satisfy your lender's vehicle eligibility criteria
Documentation
- A valid driver's licence, front and back (passports can also be accepted)
- Your two most recent consecutive payslips
- 90 days of bank statements and/or Centrelink income statements
Common bad credit used car loan questions answered
Do I have to take out insurance on a used car I purchase?
Yes, all lenders will require you to have comprehensive car insurance in place for the life of the loan. Since the car is used as security, the lender needs to know it's protected against theft, accident or damage, the same way they would with a mortgage over a house.
Will I still have to make payments if my car is written off?
Yes, you're still responsible for the loan until it's paid out, even if the car itself is gone. Your insurer's payout (if you receive one) can go towards closing the loan, but you’ll otherwise be required to pay the rest of your debt out of pocket.
Can I finance other types of second-hand vehicles?
Yes, bad credit finance isn't limited to standard passenger cars. Specialist lenders can finance used motorbikes, caravans, boats and other vehicle types, though eligibility criteria and loan terms may differ from a standard car loan.
Can I get a bad credit car loan with no credit check?
No, lenders are required to make reasonable enquiries into your financial situation before approving a loan. Checking your credit file is part of that process, so no credit check car loans don’t really exist in Australia. What bad credit lenders do differently is avoid relying on your credit score alone, weighing up your current income and expenses alongside it rather than rejecting you outright because of your history.
If I'm bankrupt, can I still apply for a used car loan?
Yes, though your options will be more limited and full disclosure of your bankruptcy is essential. Some of our specialist lending partners work with undischarged bankrupts, but approval will depend on your individual circumstances and the lender's own criteria. Your options will open up considerably once you’re discharged from your bankruptcy.