It’s the unfortunate truth that many Australians run into credit troubles in their lives. The majority of us have credit cards and 36% of people in the country have unstable incomes, leading to credit issues.

Well, that doesn’t have to stop you from making important changes in your life, even when it comes to buying a vehicle. Let’s talk about buying a car with bad credit and what you can do to make that process easier.

Can You Buy A Car With Bad Credit?

Yes, you can buy a car with bad credit, if you do a little work first. There are some lenders who may not offer you a loan with poor credit. However, if you look around a bit, you will not only find places that accept bad credit, you will even find places that don’t look at your credit before approving you.

Most of us don’t have the option to purchase a car in cash without taking a loan. The ones we could afford to buy with cash are probably going to cost a lot in repairs anyway, so it’s best to avoid them. Because of this, you will probably need to get some type of loan for your purchase.

Will It Be Too Expensive?

Not necessarily. Again, you just need to compare rates. This is challenging if you don’t know where to look but there are resources you can use to compare prices and interest rates.

If you’re looking at a loan with 30% interest rates, then yes, it’s too expensive. However, if you find lenders who are willing to work with you and make out regular payments that you can afford, then you should have no trouble finding a vehicle you can afford.

Should I Buy New Or Used?

Cars are expensive. Next to your home, it’s probably one of your biggest expenses. There’s petrol, maintenance, insurance, and your payment. If something breaks, it’s even more expensive.

That’s the main benefit of buying a new car. Many are happy to pay extra on their loan payments regularly to avoid unexpected repair costs. However, if you’re on a budget, especially if you have bad credit, it’s difficult to put a significant enough downpayment on a newer vehicle.

The opposite is also true. Buying a vehicle that’s 10 years old with 190,000 kilometers on it may show a smaller loan payment but run the risk of needing serious repairs in the near future.

Because of this, the most financially intelligent solution would be to purchase a vehicle that’s in the “sweet spot”. A vehicle loses the largest portion of its value in the first two years after its release without too much damage being done. Buying a 2019 vehicle is a status symbol in 2019 but it loses its novelty in 2021.

Buying a car that’s 1 to 3 years old will save you money upfront, give you some of the benefits of the newest technology, and last you nearly as long as a new vehicle. This way, the car can outlast your loan and you’ll be able to continue driving it once it is paid off.

What To Do When You’re Buying A Car With Bad Credit

We know you can buy a vehicle with bad credit and even get a reasonable loan, but how? Well, it’s a lot easier than you think. Here’s what you need to do to find the best car loan with bad credit.

Shop Around

There are plenty of lenders who are willing to loan money to a person with bad credit. Lenders not only understand that credit mishaps can happen to anybody, but they also understand that having collateral helps with making a loan.

When a lender lends you money for an auto loan, they hold onto the title and let you use the vehicle. If you fail to make payments, they will repossess the vehicle. This essentially guarantees they will get some amount of their money back, and almost certainly the majority.

Because of this, you should still be able to shop around for loans, even if you have bad credit. Yes, your interest rates will be higher because of the extra perceived risk from the lender’s perspective, but you should still be able to find a reasonable auto loan rate.

Get Pre-Approved

Apply to get preapproved for a loan of the maximum amount you intend to pay for a vehicle. Let’s say you’re willing to pay $15,000 for a vehicle before interest. See what rates you’re offered and go with the best option.

From there, you’ll have more leverage when it is time to purchase the vehicle, as you’ll already have the money on hand. This will also make the process a lot easier once you’ve found the vehicle you want, as you’ll be able to contact the lender and get the loan almost instantly. This means you’ll be able to drive off with your new car even sooner.

Find The Right Car

Okay, you’ve found a lender or two that are able to work with your situation. Now you need to find the right car that fits your needs. Well, you’re in luck. For such a small country, you may be surprised to know that there are over 20 million vehicles registered in Australia.

Are you simply planning to use the vehicle to commute to work and a few other activities? Well, a sedan or a coupe should work for you, and they’re usually the most affordable options!

If a smaller vehicle meets your needs, you should have no problem finding a loan for a relatively new vehicle that will last you for several years and even beyond the term of your loan.

If you have a family that you will be transporting, a larger sedan, crossover, station wagon, or small SUV will be perfect for smaller families. If your family is large, a minivan or a large SUV may be your best bet. The bigger the vehicle, the more money, in most cases.

If you need a truck or van for work, you’re looking at a higher price tag. Trucks and vans are more expensive to purchase, maintain, insure, and fuel. If you have bad credit and are on a budget, you may be forced to go for a vehicle that’s a few years older. However, if you can afford it, sticking to the last 3 years is still the safest option.

Also, look into the vehicle’s history, the reviews of the make and model, and the features that you want in the car before making a decision.


Once you’ve found the car you want with a reasonable pricetag, you still know you’ll have some interest to pay as well. Well, if you’ve found the lender who gave you the best deal on a loan, then you now have the potential to lower your cost on the car.

If you can’t save money on interest, try to save money on the sale! Find a price you’d be willing to pay and see if you can negotiate the price down by hundreds or even thousands of dollars. If you’re able to do that, you basically made your money back on the interest.

Imagine the sticker price is the maximum that you had in mind, priced at $15,000. Talk to the dealer or sales representative about your concerns with the vehicle. If there are more than 100,000 kilometers on the vehicle, express your concerns over it and tell them you’d feel more comfortable spending $13,000. Work toward finding a middle ground from here.

If you’re already pre-approved, let them know you can get them the money that day and that they won’t have to worry about any issues coming up.

Get A Loan

Once you’ve found the car and made the decision, contact your trusted lender and confirm the loan. If you’re already pre-approved, this is a simple task. Call the lender, let them know the price of the vehicle and how much money you are putting down, and they will finalize it all for you.

If you haven’t been pre-approved, get a loan quickly from a trusted lender that will work with your credit situation. Once you have that finalized, congratulations!

Drive Off The Lot!

Now that you know the ins and outs of buying a car with bad credit, you can start your search today. It doesn’t have to be that hard to find a loan with bad credit, so don’t stress about it too much. Simply take the time to look around for the car that fits your needs, get pre-approved, or apply for a loan today!