Having Bad Credit can make the process of getting a car loan stressful and hard. It’s easy to waste plenty of time looking for providers of bad credit loans. Unfortunately, even if you do find one, the interest rates on offer can sometimes be too ridiculous to bear.

First a disclaimer, following these tips will not always mean that you get an approval. These tips are my own personal recommendations based on my experience working within the industry. My experience includes both working as an assessor of bad credit loans and helping customers obtain them.


1.  Bank account history

This is by far the most important aspect that an assessor will consider. Bank statements are widely used by lenders to determine whether a loan can be given. Before you apply for a loan, check you bank account for the following:

  • Are there any dishonours? Dishonoured payments are a big no-no to most finance companies
  • Are you overdrawing your bank account? Overdrawing without having an overdraft is another big no-no
  • Are your direct debits going through? A good history of payments, even if it’s gym or rental payments, are a good sign for a lender
  • Is there money left in your bank account at all times? Some lenders need to see that there is still some money left in your account at all time



2. Eliminate Payday Loans or Personal Debts

While payday loans can be handy, the high repayments that they charge make it hard for car loan lenders to approve loans. For example, if you are earning $800 per week, a lender might (for example) say that you are able to use $200 a week of your income for a loan. Having a payday loan then eats into this amount and reduces your ability to get a new car.

See below for an example calculation.


eg. $800     per week – income
  –   $600     allowance for living expenses & rent

$200       remaining for loans

–    $120        per week – payday loan 1
–    $60        per week – payday loan2

=    $20         per  week surplus remaining for car loan repayment – not enough!





 3. Save a Deposit

Saving a deposit over 3 month period can be a powerful way to increase your chances of getting a car loan. To determine how much of a deposit you need, first work out how much the car you want to purchase. Multiply the figure by 10% to determine the amount of deposit that you should save. If you are looking for a $10,000 car, $1000 deposit can help.

Does $1,000 sound like a lot of money? If you were planning to purchase a car in 3 months time, you would only need to save $11 a day to save up the $1000. $11 a day doesn’t sound so bad, right? Consider starting a savings account at your bank and set up an automatic transfer from your main account into that account on the day that you get paid.



How much do I need to save over a 3 month period?
$1000 $11 per day
$500 $5.50 per day
$2000 $22 per day




4. Use a Finance Broker who specialises in Bad Credit

Using a finance broker for your finance application can better your chances for getting approved. They often have a range of lenders available who are not accessible to the public directly. Additionally, they have a vested interested in getting the best result for you!

Choose a broker who has had experience in dealing with applications from people with Bad Credit. Responsive Lending is an example of this type of broker. Responsive lending has access to bad credit lenders and can guide you to help get the best outcome. They are contactable on 03 9350 7331 or http://www.responsivelending.com.au