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How To Get A Car Loan With Bad Credit?

Updated: Feb 5


Getting a car loan with bad credit can feel like searching for the end of the rainbow. Between predatory rates and limited term lengths, getting a new ride may feel perpetually out of reach.


However, getting a car loan with bad credit isn’t as impossible as you might think, especially if you choose the right lending partner for your specific situation.


But how do you make the right choice for your current finances? And how hard is it to get a car loan with bad credit?


Let’s break down the answers to these questions.


Why is getting a car loan with bad credit so hard?


You’ve applied to dozens of lenders and received the same response — ‘your loan application has been denied.’ If you have a credit score that borders good, fair or below average, this is probably the rule rather than the exception.


There are a couple of reasons for this:


  • A low credit score may look risky to lenders who believe you may be unable to pay the money back.


  • Some companies take advantage of low credit scores by offering exorbitant or predatory rates.


  • Hard inquiries on your credit may reduce your credit score, which will look unfavourable to lenders.


Loan applications with low credit can be tricky, especially when purchasing a vehicle. But although getting the golden ‘yes’ takes time, it’s not impossible to buy cars with a less-than-ideal credit score.


Here’s how to do it.


How to get a car loan with bad credit


You may be able to purchase a new or used vehicle even while living with bad credit. The process can be relatively straightforward if you’re willing to be patient and persevering.


Let’s explore how to get a good car loan with bad credit in five steps:


1. Consider your needs


When purchasing a car with bad credit, research is more than half the battle. Ask yourself: what do I actually need from a vehicle? Better yet: how much can I afford to pay for it?


You may want to sit down and walk through the research process in steps:


  • Determine a budget (10-30% of your income). For example, if you make $50,000 per year, your vehicle budget should be $5,000 to $15,000 max.


  • Distinguish between a new or used vehicle. Rather than buying a brand-new vehicle (which might max out your budget), you may want to consider how to get a used car loan with bad credit instead.


  • Look for reliable makes and models as they relate to your lifestyle. Will you be driving to work only? Going on business trips? Transporting kids?


2. Save for a down payment


Now that you know your target vehicle's type, budget and age, it’s time to save up for a down payment.


Experts advise saving for a down payment that is 20% of your new car’s price or 10% if you’re planning to buy a used car. This will shave a large amount off your loan, saving more money in the long run.


Down payments are especially good at establishing trust with lenders. Putting a lump sum towards your vehicle shows your good faith in paying off a car loan, significantly raising your chances of getting approved.


3. Boost your credit score


While stocking away cash for your 20% down payment, you can start looking for ways to enhance your existing credit score. This includes fixing any mistakes in your credit report, avoiding further debt and paying all your bills on time.


You may also want to:


  • Pay off unpaid debts, if possible

  • Consolidate debt with a debt consolidation loan

  • Stay away from buy now pay later (BNPL) providers


4. Do lots of research


Now for the fun part — picking your new ride!


Shop around for the best price you can find on a vehicle that meets your needs. Your choice is more likely to be approved if:


  • It has fewer miles, equating to cheaper maintenance costs

  • It doesn’t have an accident history, which may reduce its value

  • It is reasonably priced, ideally within 30% of your annual income


Remember: don’t rush this! Take your time while finding the perfect vehicle for your needs.


5. Partner with the right lender


At this point, you’re almost done! You just have to find a car loan provider willing to give you a chance.


Salt & Lime is one such lender. Serving Australian locals with highly rated financing services, we proudly offer car loans that help you get out — and stay out — of long-term debts. If you’re struggling to find a lender that will provide a bad credit car loan, Salt & Lime may be the best option.


Get sustainable financing for your next car loan with Salt & Lime


You can get a car loan with Salt & Lime in a day or less. If approved, you’ll enjoy interest rate discounts, zero fees and one manageable repayment — no penalties if you want to pay off your loan early, either!


Here’s how you can apply today:


  • Check your eligibility for a loan using our self-vetting guide. If you are over 18, an Australian citizen and have a paying job or salaried position, you’re welcome to apply.


  • Start the online application process. You’ll also need a few important documents on hand, including your recent pay slips, bank details and job history.


  • Wait to hear back from one of our lending professionals. We strive to give you an answer within 24 hours of your initial inquiry.


  • If approved, congratulations! Your money will be deposited within 24 hours, and you can participate in our financial well-being modules or refer a friend to shave more dollars off your interest.


Ready to get started? Begin the application process today or get in touch by calling 1300 702 202, or emailing us at customercare@saltandlime.com.au.



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