6 Tips on Getting Approved for a Car Loan when you Have Bad Credit


Most of us will need to upgrade our cars as we upgrade our families. You may be going from two kids to three and need something bigger that can fit three car seats. You may be tired of trying to lift your massive pram out of your teeny boot. Or you may be looking at getting a second car for the family.

Whatever the case, the last thing you want is rejection. Getting approved for a car loan when you have bad credit may seem impossible but it’s not.

Turns out, it is possible to get a new set of wheels even if you’re in a bit of a traffic jam credit score-wise. We’ve got six great car-buying tips for families seeking car finance even when you have bad credit.

steps to getting approved for a car loan
Getting that new car with a tarnished credit rating is still possible. Source: Adobe Stock

1. Let’s start with your credit score, shall we? 

Your credit score is based on personal and financial information about you that’s kept in your credit report. As soon as you take out a loan, there will be a credit report about you, based on things like the amount of money you’ve borrowed, the number of credit applications you’ve made and your payment history.

If you have had a few debts in the past or are not super amazing at paying on time, then, yeah, your credit score may be a bit on the lower side.

So what does this mean? If I’m late on my payments, I have a bad credit score? #AskingForAFriend


Credit scores rank from 0 to 1,000 or 1,200 – the higher the score, the less of a risk you are. 

Head over to a credit score website like Equifax to find out your credit rating. It’s a free service but you will need to fill in a few deets and have documents handy to prove your identity.

At Equifax, here’s how the numbers stack up to rank your credit rating score:

  • Excellent: 833 to 1,200
  • Very good: 726 to 832
  • Average: 622 – 725
  • Fair: 510-621
  • Low: 0 – 509

Once you have your magic number, you know where you’re sitting.


2. Seek pre-approval

Seeking pre-approval from your lender is a smart move as you’ll know exactly how much they are willing to lend you. Put simply, it’s your bank/financier reviewing your application in advance and confirming the amount they’re willing to lend you.  Once you know how much you can spend, it makes for much smarter negotiation on the buying front!

3. Consult a bad credit loan specialist

But what happens if you can only borrow a small amount? You want a $30,000 car but the bank isn’t having it. This is when consulting a credit loan specialist such as Savvy can be beneficial.

Credit loan specialists compare various loans on your behalf from over 25 Australian top lenders. They simply take the stress (and emotion) away from doing the legwork yourself and give you an expert opinion in an industry you may not be too familiar with.

4.  Save a larger deposit

If you’ve got time on your side, another option is to start SAVING as much as you possibly can right now. The larger your deposit, the better off you’ll be, and less risk you become to the financier. This is true for any loan – car, house, etc.

5. Have a trusted party go guarantor on the loan

Need to get approved for a car loan right now? Another option is to find someone who will act as a guarantor, often a parent or family member, and can commit to the bank they will back you that in the event you default on the loan. In the event this happens, they will become responsible for the debt.  This massively reduces the risk to the financier and greatly increases your chance of finance.

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A trusted family member can act as a guarantor on your loan. Source: Adobe Stock

6. Seek a secured loan

A secured loan is when the vehicle is used as security, so if you happen to default on your car payments, the lender can repossess your car. Yes, it’s a bit scary thinking that this could happen but a secure loan is another option to getting approval for a car loan when you have bad credit.

Seeking car finance? 

Getting approved for a car loan when you have bad credit can be daunting but it’s important to know there are more options than just getting approval through a car company. Your best bet is to go with a credit loan specialist who will work on your behalf to help you. 

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Try not to let your bad credit score get you too down. There are ways around it and, with the right advice, you should be able to load up the troops and take off in a new set of wheels in no time!

This is a sponsored post for Savvy
Avatar of Jenna Galley

Born and raised in Canada, Jenna now lives in Far North Queensland with her tribe. When the mum-of-three is not writing, you can find her floating in the pool, watching princess movies, frolicking on the beach, bouncing her baby to sleep or nagging her older kids to put on their pants.

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