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How to Apply for a Loan With Bad Credit

Dec 8, 2023 | Finance Tips

Applying for a loan can be intimidating, especially if you already have a bad credit history or have been denied credit in the past. However, bad credit doesn’t have to be a barrier in obtaining a loan.

Whether it’s a Personal Loan, Car Loan or even a Business Loan, there are steps you can take to improve your chances of approval and there are lenders out there who are prepared to work with you, where possible.

Read on to learn our tips on how you can help bolster your chances of approval for a bad credit loan.


Our best tips on how to help you get a Car Loan with bad credit (or any other loan!)

There are many ways that you can help improve your chances of securing finance. We’re happy to share our best tips on bad credit loans.

Keep your bank account in the green

We understand that it doesn’t take much to damage your creditworthiness. Missing a couple of Car Loan repayments or even a failed business venture can have a serious impact on someone who previously had a good credit history. Not to mention those who have entered into Part IX Debt Agreements or have been discharged bankrupts. It can take a long time to recover from a bad credit situation as credit defaults are recorded for five years on your file and missed payments stay on there for two years!

If you have stable finances now but are still suffering from yesteryear’s struggles, let your bank statements demonstrate your ability to budget, save, and stay on top of your financial commitments. Having no overdrawn accounts for at least a year can be a huge plus when it comes to showing you’re better with your money than your credit report may indicate.

This also applies to people who have little to no credit history. Consider adults who’ve recently become permanent residents, or a young person looking to buy their first car — it can be difficult to demonstrate your worthiness to lend money to with an empty credit file. Keeping your bank account in the green can help you on your way to building a good credit score.

Show a stable employment history

Changing jobs is sometimes unavoidable, particularly if your work has been impacted by COVID-19. If you’ve had lots of job changes recently, lenders may view this as unstable income and may not be less willing to lend you money than if you’ve been at the same job for 12 months or longer.

Employment history can be one of the biggest reasons that sole-traders find it difficult to access loans, and why many come to Finance One after being turned away from multiple lenders elsewhere.

Consider putting down a cash deposit

Putting down a cash deposit at the start of your loan may help you get it approved, especially if you’re applying for a Car Loan or Business Loan, and as long as you meet all other normal lending requirements. Not only will this effectively decrease your loan amount, but most lenders will likely consider a deposit as proof of your ability to manage money and your commitment to a new loan, essentially helping to get the loan approved.


Review your credit history with a credit reporting agency

Sometimes what’s holding you back can be fixed as easily as making a phone call. By reviewing your file with a credit reporting agency, you may be able to see exactly what’s got you off track and whether there are any defaults listed in error that can be removed or incorrect information that can be straightened out.

If your research shows that you have unpaid defaults, you may have the opportunity to pay these off before striking another credit check on your report.

Beware of companies who claim to wash or wipe your credit, as they hold no more power than you do and will charge you handsomely for making the same phone call you can make yourself.


Go for a lower amount

It might seem obvious to say that a lower outstanding loan balance entails less repayment and generally a better likelihood of being approved. For example, if you’re looking at a new car or business equipment, why not consider a second-hand option? There are some fantastic quality used cars and machinery out there for a fraction of the price.


Consider what loan type works best for you

If you’re looking for car finance, then choosing between a personal loan or car loan could be the difference between being approved or declined. At Finance One, our Australian Credit Licence gives us the ability to educate you on both Personal Loans and Car Loans, however, we cannot provide personalised financial advice regarding the suitability of a particular credit product for your unique circumstances. However, there are pros and cons of both types of loans and you may be able to help your chances of being approved for a loan by doing your research and seeking independent legal and financial advice.

Unsecured loans are more difficult to obtain because they do not provide your credit provider with any asset to hold a legal claim to if you default and are unable to repay the loan. If you’re looking at buying a new or used car but already have a low credit score, a secured Car Loan may be your best option. A secured loan may be a more cost-effective option than bad credit Personal Loans due to the security reducing the lenders overall risk.

However, a Personal Loan may provide you more flexibility and allow you to borrow slightly more than the car’s value, which you could use to pay off other small debts or make other purchases you have had your eye on.

A bad credit Car Loan might be one of the ways you get into your dream car, sooner.


Is my loan application affected by my credit score?

When you apply for credit, whether it’s to get a mobile phone plan, a credit card or a Car Loan, the lender will run a credit check to access and assess your credit rating. Many lenders will reject your application if you have a bad credit history. This is because a poor score on your credit file can indicate you have had financial difficulty in the past and may not be a creditworthy person to lend further money to.

For lenders like Finance One, we consider your score, but we are more compassionate and personalised in our approach, looking at your entire financial situation before hitting the decline button on your application.

Those with a bad credit score will often attract higher interest rates than those with good credit scores, which makes comparing loans difficult as the usual market interest rate typically doesn’t apply to them.

Am I eligible for a Loan with bad credit?

Check to see if you might be eligible to apply for a loan through Finance One:

  • Do you have regular, consistent income?
  • Do you want to borrow somewhere between $5,000 – $75,000*?
  • Are you at least 18 years old?

If you answered ‘YES’ to all three, then chances are, we may be able to help you secure finance. Even if you have poor credit history, Finance One can consider borrowers with low credit scores.

We are proud to be a finance company that separates ourselves from others, and can try to help you out when other lenders can’t, even if you:

  • have defaults on your credit file,
  • have previously had a Part IX Debt Agreement,
  • have a checkered credit history.

Apply now to experience the Finance One difference.


*Vehicle Loans between $50,000 to $75,000 must be asset backed.

Apply Now

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.

Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.

Finance One means “Fin One Pty Ltd – ABN: 80 139 719 903 – ACL: 387528”

Check you can afford the repayments

Loans for bad credit are often more affordable than you think, but of course, it’s wise to make sure you can afford the loan repayments before applying. Check out our loan repayment calculator. With no early repayment fees, our loan options could mean that you get ahead and help start to improve your bad credit rating.

How to Apply for a Loan With Bad Credit

Dec 8, 2023 | Finance Tips

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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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