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Can I get a car loan after bankruptcy?

Aug 9, 2021 | Finance Tips

While bankruptcy is generally a last resort option, countless unavoidable life circumstances can lead many of us down this road. 


If you’ve been through this process and are now a discharged bankrupt, you may be asking the question “can I apply for a car loan or a personal loan if I have been bankrupt?” We’re here to tell you that you can! It’s possible to repair your credit and get a loan after bankruptcy. Everyone deserves a second chance and at Finance One, we can help make second chances happen.

What is bankruptcy?

While it’s possible to take steps to minimise the financial risks that come with being human, sometimes we are hit by unforeseen events that are out of our control. Unexpected medical expenses, the destruction of uninsured (or under-insured) property or possessions, job loss or prolonged unemployment are just a few of the unexpected events that can render you unable to repay your debts.
If you find yourself unable to meet your debt obligations including the likes of credit cards or unsecured debts such as personal loans, bankruptcy is a legal process designed to release you from repaying most outstanding debts.

A person can voluntarily apply for bankruptcy or be forced into it by someone they owe money to through a court process often referred to as a creditor’s petition. Once you have been declared bankrupt, you can be given a fresh start by being legally released from most types of debt. But this often comes with a long list of consequences and added stress. It’s certainly not always the easy way out, especially if you need to access finance in the future.

That may not always be the end of it though. It’s not as simple as wiping your debt, leaving you free and clear. Sometimes assets may need to be sold or regular payments made need to be made to creditors to help repay debt. If you have been bankrupt, you may not be able to travel overseas, have easy access to finance and employment options may also be limited.


Types of Bankruptcy

Part IX Debt Agreement

Part IX Debt Agreement

Agreement with creditors to help settle debts and pay an amount that you can afford.



Formal and legal process where
you’re declared unable to pay
your debts.


When you declare that you are unable to pay your debts the formal process is known as bankruptcy. By entering into bankruptcy, you may be legally released from your obligation to repay some of your debts. This may not seem so bad however it can have a negative impact on your ability to borrow money in the future and bankruptcy will appear on your credit file for 5 years

Part IX Debt Agreement

A debt agreement also referred to as a Part IX Debt Agreement is a formal agreement with your creditors (who you owe money to). In a Part IX debt agreement, you and your creditors will settle on an amount that you can afford to repay them. Once all agreed money is paid, the creditor will consider the debt paid in full. Part IX Debt Agreements are not considered the same as bankruptcy, however they will still show on your credit report for 5 years from the date you enter into the agreement.

I have been discharged from bankruptcy; how do I apply for a loan?

The good news is there are many lenders who provide car loans and personal loans to people who have been discharged for a period of time from bankruptcy or a Part IX Debt Agreement. Finance One is a lender who can provide loans for people who have had bad credit or are discharged from bankruptcy. Finance One have helped many Australians get access to finance after bankruptcy.

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6 Tips for getting back on track after bankruptcy

Your credit report will typically show the bankruptcy for 5 years, which means you’ll likely have a hard time accessing finance during this period. Fortunately, there are steps you can take to improve your chances of being approved for a loan.

1) Create a budget and stick to it. Sitting down and setting a budget is a great way to monitor your incomings and outgoings, build up your savings and demonstrate that you are responsible with your money.

2) Gain stable employment. A regular, stable income is a great way to build financial security and improve your credit rating.

3) Reduce loan applications. Make sure you do your research before applying for finance, try to avoid applying for finance here, there and everywhere. Even once you’ve been discharged from bankruptcy, excessive credit applications and rejections can negatively impact your credit score.

4) Find a suitable lender. As mentioned above, applying for a large amount of loans or credit cards can have a negative impact on your credit score. This is why it is important to find a lender who is willing to work with you if you have experienced bankruptcy or have a bad credit history.

5) Pay any bills on time. Any debts or bills in your name – whether gas or a phone bill for example – can influence your credit score. Ensuring you pay any bills on time will generally have a positive effect on your credit score.

6) End bankruptcy early. If you repay your debt in full or your creditors agree to accept a lesser amount, you can end your bankruptcy early. This is called an annulment.


Finance One Loans for Discharged Bankrupts

If you require a car loan or personal loan after you have been discharged from bankruptcy, we may be able to help. At Finance One, we understand that life can be rocky at times and we’re passionate about helping people get back on track, and giving them a second chance where we can, with finance. We offer car loans from $5,000 up to $75,000* and can work with applicants who have been discharged from bankruptcy. There’s no reason why life after bankruptcy can’t be even better than it was before.

* Loans from $50,000 to $75,000 need to be asset backed, and normal lending criteria, terms and conditions, fees and charges apply.

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information.

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Makala Elliott

Makala is the Marketing Manager at Finance One. She has worked in the Finance and Lending industry for over 10 years, gathering a wealth of experience. She is passionate about helping Australians get back on track with their finances by passing on her knowledge.

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