Quick Answer: Can You Get a Car Loan with Bad Credit?
Yes, you can get approved for a car loan with bad credit in Australia in 2025. Here's what you need:
| Requirement | Minimum for Bad Credit Approval | Ideal for Better Rates |
|---|---|---|
| Annual Income | $45,000+ | $60,000+ |
| Employment | 1+ months full-time | 6+ months same employer |
| Deposit | 10-20% of vehicle value | 30%+ |
| Credit Score | No minimum (some lenders) | 400+ |
| Interest Rate | 15-25% | 12-15% |
The reality: Thousands of Australians with defaults, late payments, and low credit scores get approved every month. The key is applying to the right lender for your situation.
CQ quick take
Bad credit car finance is common in Central Queensland (CQ), especially for buyers with past defaults, contract work, or frequent address/employment changes. The fastest way to improve approval odds is to be organised before you apply.
- MoneySmart explains credit scores and credit reports (worth reading before you apply): Credit scores and credit reports.
- If you want help getting pre-approved (and buying the car without dealership pressure), talk to a Central Queensland car broker or start here: Car Finance Queensland.
What Counts as "Bad Credit" in Australia?
Your credit score in Australia typically ranges from 0-1200 (depending on the bureau). Here's how lenders categorise it:
| Credit Score | Rating | Car Loan Approval Odds | Typical Interest Rate |
|---|---|---|---|
| 800+ | Excellent | 95%+ with mainstream lenders | 6-8% |
| 700-799 | Good | 85%+ mainstream, easy approval | 7-10% |
| 500-699 | Average | 70%+ specialist may help | 10-15% |
| 400-499 | Below Average | 50%+ specialist lenders only | 15-20% |
| 300-399 | Poor | 30-40% specialist with deposit | 18-25% |
| Under 300 | Very Poor | 20-30% with guarantor/large deposit | 22-28% |
Common reasons for a lower score:
- Missed or late payments (stay on file 2 years)
- Defaults on accounts (stay on file 5 years)
- Too many credit applications in 6 months
- Bankruptcy (current or discharged—stays 5-7 years)
- Court judgments (stay 5 years)
- Previously payday loans (even if repaid on time)
Your Real Approval Chances in 2025
Short answer: Yes, you can get approved, but rates vary significantly.
| Your Situation | Approval Odds | Expected Rate | Deposit Needed |
|---|---|---|---|
| Score 450+, stable job 6+ months | 70-80% | 12-16% | 10-20% |
| Score under 400, stable job | 40-50% | 18-22% | 20-30% |
| Recent default (under 12 months) | 30-40% | 20-25% | 25%+ |
| Paid default (over 12 months) | 60-70% | 15-20% | 15-20% |
| Post-bankruptcy (discharged 12+ months) | 40-50% | 18-22% | 20-30% |
| With guarantor (any score) | 80%+ | 10-15% | 5-10% |
What Lenders Look At (Besides Credit Score)
- Current income - Can you afford the repayments?
- Employment stability - How long in your job?
- Living situation - Rent, mortgage, or living with family?
- Existing debts - What's your debt-to-income ratio?
- The vehicle itself - Age, km, value as security
- Time since credit events - Old defaults matter less
Your Financing Options
Option 1: Specialist Bad Credit Lenders
These lenders specifically work with people who can't get mainstream finance:
Pros:
- Designed for your situation
- More flexible approval criteria
- Often faster decisions
Cons:
- Higher interest rates (12-25%+)
- May require larger deposit
- Vehicle restrictions (often under 10 years old)
Typical rates: 15-25% p.a.
Option 2: Secured Car Loans
Using the vehicle as security improves your chances:
Pros:
- Lower rates than unsecured
- Easier approval
- Vehicle acts as collateral
Cons:
- Must meet vehicle requirements
- Lender can repossess if you default
- Usually need comprehensive insurance
Option 3: Credit Union Loans
Some credit unions take a more holistic view:
Pros:
- May consider your overall situation
- Often more personal service
- Can explain circumstances
Cons:
- Must be a member
- Not all credit unions offer this
- May still have limits
Option 4: In-House Dealer Finance
Some dealers offer their own finance for bad credit buyers:
Pros:
- One-stop solution
- May be more flexible
- Quick approval
Cons:
- Often very high rates
- Limited to that dealer's stock
- May include unwanted add-ons
Caution: Always compare the total cost, not just whether you're approved.
Option 5: Guarantor Loan
Having someone with good credit guarantee your loan:
Pros:
- Better rates
- Higher approval chances
- Build your credit
Cons:
- Puts guarantor at risk
- Not everyone has this option
- Can strain relationships
How to Improve Your Chances
Before Applying
1. Check your credit file first Get your free report from Equifax, Experian, or illion. Look for:
- Errors (more common than you'd think)
- What's actually listed
- When old items will drop off
2. Fix any errors Dispute anything that's wrong. This is free and can take 30 days.
3. Pay down existing debt Lower debt-to-income = better chances.
4. Don't apply everywhere Each application creates an enquiry. Too many = red flag.
5. Save a larger deposit 20-30% deposit significantly improves odds.
What to Bring to Your Application
- Last 3 months payslips
- Bank statements (showing savings and spending)
- ID documents
- Explanation of credit issues (if applicable)
- Evidence of current bills being paid on time
What to Watch Out For
High-Interest Traps: Real Cost Comparison
| Loan Details | Bad Credit (25%) | Average Credit (15%) | Good Credit (8%) |
|---|---|---|---|
| Vehicle Price | $30,000 | $30,000 | $30,000 |
| Loan Term | 7 years | 5 years | 5 years |
| Monthly Payment | $668 | $714 | $608 |
| Total Interest Paid | $26,112 | $12,840 | $6,480 |
| Total Cost | $56,112 | $42,840 | $36,480 |
The difference: $20,000+ between best and worst case. This is why we work hard to get you the best rate possible—even a few percent matters.
"Guaranteed Approval" Claims
No legitimate lender can guarantee approval. If someone promises this, be very wary:
- They may charge excessive fees
- Interest rates could be astronomical
- Terms may be predatory
Unrealistic Vehicle Choices
Getting approved for a $60,000 vehicle when you can barely afford a $30,000 one is not a win. It's a setup for failure and repossession.
Real Examples: How We've Helped CQ Clients
Example 1: Paid Defaults, Stable Job
Client: Rockhampton resident, mining industry worker Situation: Two defaults from 3 years ago (now paid), $78,000 income, stable job for 18 months, $5,000 deposit
| Stage | What Happened |
|---|---|
| Mainstream banks | Declined due to credit history |
| Our approach | Gathered payslips, bank statements, and letter explaining circumstances |
| Lender match | Submitted to specialist lender with full story |
| Result | Approved at 14.9% for $28,000 (2019 Mazda CX-5) |
| 12 months later | Refinanced to 11% after clean repayment history |
Example 2: Recent Default, Low Deposit
Client: Mackay tradesperson Situation: One unpaid default (6 months old), $52,000 income, 8 months in current job, $2,500 deposit
| Stage | What Happened |
|---|---|
| First attempt | Declined—default too recent, deposit too low |
| Our advice | Wait 3 months, save $5,000 more |
| Second attempt | 9-month-old default, $7,500 deposit |
| Result | Approved at 18.9% for $22,000 (2020 Toyota Corolla) |
Example 3: Post-Bankruptcy Fresh Start
Client: Gladstone family Situation: Bankruptcy discharged 14 months ago, new job 10 months, $8,000 deposit, household income $95,000
| Stage | What Happened |
|---|---|
| Challenge | Post-bankruptcy notation on file |
| Our approach | Found lender specialising in fresh starts |
| Result | Approved at 16.9% for $32,000 (2018 Holden Colorado) |
| Path forward | Credit rebuilding plan to refinance in 18 months |
The Bigger Picture
Bad credit car loans should be a stepping stone, not a permanent solution:
Year 1-2: Pay your bad credit loan on time, every time Year 2-3: Your credit score improves Year 3+: Refinance to a better rate or pay off the loan
Building credit while you drive is the goal.
Get Bad Credit Finance Help in Your Area
We help people with imperfect credit across Central Queensland:
Major Centres:
- Bad Credit Car Finance Rockhampton – Access lenders who look beyond your credit score
- Mackay Car Loans – Second chance finance for Mackay residents
- Gladstone Bad Credit Finance – Local brokers who understand your situation
- Yeppoon Car Finance – Specialist lenders for the Capricorn Coast
- Emerald Car Loans – Central Highlands lending solutions
Regional CQ:
- Sarina Car Finance – Bad credit options for Sarina
- Biloela Car Loans – Banana Shire lending specialists
- Mount Morgan Finance – Local bad credit solutions
- Clermont Car Finance – Isaac Region specialists
- Moranbah Car Loans – Mining town finance options
All Queensland:
- Queensland Car Finance – Statewide bad credit solutions
How We Can Help
At CQ Car Brokers, we work with multiple lenders—including those specialising in bad credit situations.
We can:
- Assess your realistic options (honestly)
- Present your application in the best light
- Find vehicles that meet lender requirements
- Avoid wasting applications
Not sure where you stand? Get a free finance assessment for a confidential chat. We'll tell you straight what's possible.
Next steps (free help)
- Start a car finance application
- Talk to us first (no pressure)
- Car Finance Rockhampton
- Car Finance Mackay
- Car Finance Gladstone
- Queensland car broker
- Rockhampton car broker
- Mackay car broker
- Gladstone car broker
Frequently Asked Questions About Bad Credit Car Loans
Can I get a car loan with a credit score under 500?
Yes, you can get approved for a car loan with a credit score under 500 in Australia 2025. Specialist bad credit lenders focus on your current income ($45,000+ minimum), employment stability (1+ month full-time), and ability to make repayments rather than credit score alone. Expect interest rates of 15-25%, deposits of 20-30%, and vehicle age restrictions (typically under 10 years old). A stable job for 6+ months significantly improves approval odds from 30% to 50%+.
How much deposit do I need for a bad credit car loan?
Bad credit car loan deposits in Australia typically range from 10-30% depending on your situation:
| Credit Situation | Minimum Deposit | Recommended |
|---|---|---|
| Score 450+ with job | 10-15% | 20% |
| Score under 400 | 20-25% | 30% |
| Recent default | 25-30% | 35%+ |
| Post-bankruptcy | 20-30% | 30%+ |
On a $25,000 vehicle, that's $2,500-$7,500 upfront. Larger deposits reduce lender risk, improve approval chances, and can lower your interest rate by 2-3%.
What interest rate will I pay with bad credit?
Bad credit car loan interest rates in Australia 2025 typically range from 12-25% p.a., compared to 6-9% for mainstream loans. Your exact rate depends on:
- Credit score: Under 400 = 18-25%, 400-500 = 15-20%, 500+ = 12-15%
- Employment: 6+ months stable = better rates
- Deposit: 30%+ deposit can save 2-3% on rate
- Vehicle: Newer vehicles (under 7 years) get better rates
After 12-24 months of on-time payments, many borrowers successfully refinance to 10-14% rates.
Will applying for a car loan hurt my credit score?
Yes, each car loan application creates a "hard enquiry" on your credit file, lowering your score by 5-10 points for up to 12 months. Multiple applications in 6 months is a red flag—lenders see it as desperation. This is why working with a broker protects your credit. We know which lenders approve your situation and submit once, avoiding multiple rejection marks.
How long after bankruptcy can I get a car loan?
You can apply for a car loan immediately after bankruptcy discharge, but options improve with time:
| Time Post-Discharge | Approval Odds | Typical Rate |
|---|---|---|
| 0-12 months | 20-30% | 22-28% |
| 12-24 months | 40-50% | 18-22% |
| 24-36 months | 60-70% | 15-18% |
| 3+ years | 70%+ | 12-16% |
The bankruptcy notation remains on your credit file for 5 years (Part IX) or 7 years (Part X) from discharge date.
Can a guarantor help me get a better car loan rate?
Yes, a guarantor with good credit can transform your loan options. With a guarantor, you may access mainstream lenders at 8-12% instead of 15-25% from specialist lenders. The guarantor agrees to cover repayments if you default, which reduces lender risk significantly. However, this puts their credit score and your relationship at risk—only pursue this if you're absolutely confident you'll make every payment.
What documents do I need for a bad credit car loan?
For bad credit car loan approval in Australia 2025, prepare:
- Last 3 months payslips (showing stable income)
- 3 months bank statements (showing savings and bill payments)
- 100 points ID (driver's licence, Medicare card, passport)
- Letter explaining credit issues (if applicable)
- Proof of residence (utility bill, lease agreement)
- Details of vehicle you want to purchase
Can I get a car loan with a default still on my file?
Yes, you can get approved with an unpaid or paid default on your credit file:
| Default Status | Approval Odds | Typical Rate |
|---|---|---|
| Paid default 2+ years ago | 70%+ | 14-18% |
| Paid default under 2 years | 50-60% | 16-20% |
| Unpaid default (small, <$1,000) | 40-50% | 18-22% |
| Unpaid default (large, $5,000+) | 20-30% | 22-25%+ |
Paid defaults are viewed much more favourably. If you can afford to pay off old defaults before applying, it significantly improves your options.
