Bad Credit Car Loans
Need a second chance? Get Savvy on your side apply for a car loan today, even if you have bad credit.Top of Form
Fact checked
Do you have a bad credit rating? Have your car loan applications been rejected by the banks? At Savvy, we’re partnered with a wide range of reputable lenders to give you more options when it comes to financing your vehicle.
Whether you’re a single parent, receiving Centrelink benefits or have defaults on your file, we can help you secure a bad credit car loan suited to your situation. Our experienced consultants can help you maximise your chances of approval for your car loan approval and advise you on the best steps to take.
Get the wheels in motion on your second-chance car loan application by completing a free, no-obligation quote with us today to find out whether we can help you secure the finance you’re looking for.
How much will my bad credit car loan cost?
There’s a range of factors that can impact the cost of your bad credit car loan, such as the following:
Interest rates
As mentioned, rates will be higher on bad credit loans compared to other car loans. The following table shows how higher rates can make a big difference to the total amount of interest you’ll have to pay on your loan:
| Loan size | 15.00% p.a. | 16.00% p.a. | 17.00% p.a. | 18.00% p.a. |
|---|---|---|---|---|
|
$20,000 |
$8,548 |
$9,182 |
$9,824 |
$10,473 |
|
$30,000 |
$12,822 |
$13,773 |
$14,735 |
$15,709 |
|
$40,000 |
$17,096 |
$18,364 |
$19,647 |
$20,945 |
|
$50,000 |
$21,370 |
$22,955 |
$24,558 |
$26,181 |
Calculations are based on a five-year loan term and monthly instalments.
As you can see, on a $30,000 loan, the jump from 15.00% p.a. to 16.00% p.a. could cost you over $950.
Fees
There are several fees which can be charged on your loan. These include:
- Establishment fee: a one-off fee built into your repayments which can cost up to $600 to $900.
- Monthly fees: an ongoing charge included on each repayment which can range from $5 to $15 or more.
- Early repayment fees: these may be charged if you pay out your loan ahead of schedule, with the cost depending on the size of your loan and the time left to run on your term.
- Late payment fees: these may be charged if you submit a payment late or miss it altogether. They can be costly if they stack up.
Loan amount
Because interest is calculated based on your outstanding loan balance, greater sums will result in higher overall interest outlays. This can be seen when comparing the loans in the table above. For example, on a five-year loan repaid monthly at 15.00% p.a., the total interest rises from $8,548 on a $20,000 loan to $12,822 on a $30,000 loan.
Loan term
Longer loan terms will also result in greater interest charged overall. This is because your outstanding loan balance will decrease at a slower rate, meaning interest charges will stay higher for longer. This can be seen in the following table:
| Loan term | Repayments | Total interest | Total saving |
|---|---|---|---|
|
Five years |
$714 |
$12,822 |
N/A |
|
Four years |
$835 |
$10,077 |
$2,746 |
|
Three years |
$1,040 |
$7,439 |
$5,384 |
|
Two years |
$1,455 |
$4,911 |
$7,912 |
Calculations based on a $30,000 car loan repaid monthly with a 15.00% p.a. interest rate.
By shortening your term from five years to four for the loan example listed above, you’ll be required to pay $120 extra per month (or around $30 extra per week) in return for a saving of almost $2,750.
Extra repayments
If you’re able to make free additional repayments and not pay early termination fees, you could end up paying off your loan much sooner and for a lower cost. You can see this in the table below:
| Loan term | Extra payment | Total payments | Total interest | Total saving | Total loan term |
|---|---|---|---|---|---|
|
Five years |
$0 |
$714 |
$12,822 |
N/A |
Five years |
|
Five years |
$50 |
$764 |
$11,521 |
$1,301 |
Four years, seven months |
|
Five years |
$100 |
$814 |
$10,467 |
$2,355 |
Four years, two months |
Calculations based on a $30,000 car loan repaid monthly with a 15.00% p.a. interest rate.
By paying just $50 extra per month (or around $13 extra per week), you’d clear your debt five months sooner and save over $1,300 on a loan with the terms included above.
Deposits
Paying a deposit at the point of purchase reduces the size of your loan, and therefore the interest you’ll have to pay. You can see this in the table below:
| Deposit | Loan amount | Repayments | Total interest | Total saving |
|---|---|---|---|---|
|
$0 |
$30,000 |
$714 |
$12,822 |
N/A |
|
$1,500 |
$28,500 |
$679 |
$12,180 |
$642 |
|
$3,000 |
$27,000 |
$643 |
$11,540 |
$1,283 |
Calculations based on a car loan repaid monthly over five years with a 15.00% p.a. interest rate.
Even a 5% deposit on a $30,000 loan ($1,500) can save you hundreds of dollars over the course of your agreement. Speak with your Savvy consultant about the potential cost of your loan and how much you could save by optimising some of the above factors.
Can I refinance my car loan with bad credit?
You may be able to refinance your car loan deal if you have bad credit. However, whether you can do so will depend on your profile and lender. First, as a borrower, you’ll need to show potential lenders that:
- You’ve consistently made repayments on time and in full
- You’ve decreased or eliminated other bad debts
- You’ve continued to have stability in your life, such as a consistent recent employment, income and residential history
If you had bad credit when you took out your car loan but have made strides to improve it with the points above are considered by financiers to have “correctable credit”. This means that you’re capable of taking positive steps towards a better financial situation and are considered a lower risk than you were previously. Someone with “correctable credit” is much more likely to be approved for future loans.
Second, and crucially, is applying with the right lender. Most financiers on the market won’t work with applicants with bad credit, even if they’ve taken steps to improve it. However, there are plenty of specialist lenders ready to provide second-chance finance to those who’ve struggled in the past. When you apply with Savvy, we’ll help connect you with lenders who do just that.
What are bad credit car loans and how do they work?
Bad credit car loans are structured in the same way as any other standard car loan but are designed to be taken out by borrowers with less than perfect credit histories. They use the car you’re purchasing as collateral for the loan and are repaid in instalments with interest and fees.
Because of the increased risk associated with borrowers who’ve struggled with their credit, the interest and fees you’ll be required to pay will typically be higher than on a loan for someone with good credit. Additionally, the amount you can borrow and terms you can access may also be more limited.
You can speak with your dedicated Savvy consultant about your bad credit car finance options. We’ll work with you to see if your profile matches with one of our specialist bad credit lenders and, if it does, get your formal application prepared and submitted for approval.
What are the eligibility criteria for bad credit car loans?
The qualification requirements for bad credit car finance will vary depending on the lender you go with. However, in general, you’ll need to meet the following criteria:
- You must be 18 years of age
- You must be an Australian citizen or permanent resident (options may exist for eligible visa holders)
- You must be earning a consistent income from stable sources (full-time, part-time or consistent casual or self-employed income, as well as eligible Centrelink payments) that meets minimum income requirements and is enough to support your repayments
- You mustn’t be bankrupt or under a Part IX debt agreement
Minimum income requirements can vary from around $20,000 to $26,000 per year (approximately $400 to $500 per week).
Why bad credit customers trust Savvy
Over a decade in the industry
With more than 10 years under our belt working with Australians like you, we understand how to find the right deal.
Obligation-free quotes
All our car loan quotes are obligation-free, so you don’t have to worry if you aren’t ready to sign on the dotted line yet.
Trusted bad credit lending specialists
We’re partnered and accredited with a wide variety of lenders across the country, including bad credit specialists.
Feefo's Trusted Service Award winner with over 4,000 satisfied customers
Savvy is rated 4.9 for customer satisfaction by 4089 customers.
How to apply for a bad credit car loan with Savvy
Fill out our online application form
Our car loan starts with an easy application form (which takes no more than ten minutes) to assess your profile and find the most suitable lenders for your individual situation.
Send through the required documents
We may require additional supporting documents to further process your application, such as bank statements, which you can submit via our online portal. You can also sign any relevant documents electronically.
Discuss your options with your consultant
Your personal consultant will call you within two hours of your application to discuss your car finance options. Once you’re happy with your choice, we can prepare your application for formal approval.
Sign your contract and drive away your new car
From there, you can expect to be formally approved within 24 hours. We'll organise settlement for you once you’ve signed off on the paperwork, after which you you’ll be able to drive away your new car!
Top tips to increase your chances of bad credit car loan approval
Your income will need to comfortably cover the loan’s repayments and meet your lender’s minimum salary requirements. Additionally, individuals who have a track record of remaining in employment are more likely to be approved, with several years in the same job preferred.
A lender will want to see a realistic loan amount in your application: the lower the amount, the lower the risk. For example, they won’t generally accept a $150,000 application from a bad credit customer, as higher amounts are deemed too great a risk. Only apply for an amount you can afford to repay based on your income and expenses.
Your cost-of-living expenses will inform your lender’s decision also, as they’ll want to see that paying off your loan won’t be too difficult for you to achieve alongside your current expenses. Cutting back on non-essential purchases frees up more room in your budget, increasing your approval chances.
If you can prove yourself to be relatively responsible with your money, such as by growing your savings, it can go a long way towards helping your chances of approval. Having a healthy savings account displays financial discipline and that you have a fall-back option if your income or job situation changes.
Lenders want to see that your living arrangements are stable and unlikely to change too much into the future, with a couple of years living in the one place (either renting or purchased by you) generally preferred. However, if you’re living at home or boarding, you may not be required to have stayed in the same place for as long a period.
Although your credit score isn’t the be all and end all, taking steps to improve it can boost your chances of approval. Paying off outstanding loans and defaults and reducing your credit limit can help you increase your credit score and show your lender that you’re serious about improving your situation.
Bad credit car loan questions answered
Brands you can trust
