Where can you get finance with bad credit in Australia? 

Don’t let a bad credit history keep you from getting a loan; our collection of reputable Australian lenders will consider your loan application and give you the second chance you deserve. 

Bad credit loans are not unlike personal loans offered to those with good credit. They offer you anything from $100 to $50,000 with repayment terms ranging from 16 days to 7 years

The only major difference is that you're likely to have to settle for a significantly higher interest rate and, for larger loans, be required to put up some form of collateral. Further on, we'll lay out the various providers offering bad credit loans but for now, just know that getting a loan with bad credit is possible

Bad credit loan uses

Bad credit loans can be used for just about anything that a personal loan can. Typically, however, they're not suitable for debt consolidation given their higher cost. You may use a bad credit loan to purchase a car which will usually be used as security. 

What is a bad credit score? 

A bad credit score refers to a below-average rating according to one of the three Australian credit bureaus. People with bad credit generally either have one or more credit defaults or lack a credit history altogether. 

  Poor Average/Fair Good Very good Excellent
Equifax 0 - 505 506 - 665  666 - 755 756 - 840 841 - 1200
Experian 0 - 549 550 - 624  625 - 699 700 - 799 800 - 1000
Illion 0- 299 300 - 499 500 - 699 700 - 799 800 - 1000

How to get a loan with bad credit

If you have bad credit, a lender will base its lending decision on two factors; affordability and the availability of security. To increase your chances of approval you should compare various loans and make use of a specialised bad credit lender. 

Can I afford a loan? 

To determine affordability review your income and expenses to establish what's leftover (and therefore what will be available to honour repayments on your new loan).

Once you've worked out your surplus, you can make use of our online loan calculator to determine how much you can afford to borrow and for how long. It may also help to obtain a copy of your credit report and find out just how bad your bad credit situation really is. 

Bad credit loan security 

With a bad credit loan, you need to place an asset as security. In this way, if you default on the loan, the lender will have the right to repossess the asset as compensation for the default.

Since the risk for the lender is lower when collateral is available, you'll stand higher chances of approval. You may even be able to secure a lower interest rate. This option is risky, but it can be quite helpful as long as you're able to pay back the loan.

Requirements to apply for a bad credit loan

In order to assess your eligibility as a loan applicant, the lender will check your credit file. Each lender has its own criteria so you may be able to qualify even if your credit file is not completely blemish-free.

You should definitely go over your credit file before you make a loan application. You can request a free credit check once every year from the following credit agencies; Experian or Equifax. You should watch out for errors. If you find any, have them fixed right away.

Since the eligibility requirements of lenders vary, you'll benefit from making use of a loan comparison service or a broker. If you make multiple applications to various providers your credit score will suffer considerably.

Only apply with registered lenders in line with the National Consumer Credit Protection Act and following a responsible lending policy.

To qualify for a bad credit loan you must: 

  • Be an Australian citizen or permanent resident
  • Be 18 years of age or older
  • Have a steady stream of income 
  • You must have been employed for the full 6 months preceding the application (or 12 months if self-employed)
  • Be able to prove affordability 
  • For some loans, you'll need to provide sufficient security 

Supporting documents required 

  • An acceptable form of ID 
  • Proof of income in the form of recent payslips 
  • 6-months worth of bank statements 
  • Proof of address (a utility bill) 
  • Various documents related to your specific form of security 

Where can I get a cash loan with bad credit?

Credit union loans

Traditionally, credit unions have been more flexible with regard to credit ratings when compared to banks. They're more likely to look into your individual circumstances and take the time to understand your situation. As profit is not their primary aim, if your application is successful you're probably going to secure a lower interest rate. 

Peer-to-peer (P2P) lenders

Peer-to-peer lending platforms are becoming ever more popular. You can visit such a platform online and borrow money from a private person. When you deal with individual lenders, there are no strictly defined eligibility criteria. You can get an online loan easily and arrange a more flexible repayment term. You'll still have to pay interest and fees so you need to plan the repayment of the loan carefully. 

Specialist high-risk lenders 

Lenders that specialise in the provision of loans to Australians with bad credit are your best bet when it comes to securing approval with a bad credit history. These lenders know exactly what to look for when determining whether the loan is suitable for your current financial circumstances and have the expertise to ensure a smooth transaction. 

Alternative providers and sources

A family member or a friend can help you obtain finance by becoming your co-signer. When you apply for a loan together with a person who has a good credit history and stable income, your chances of approval will be much higher because you'll be jointly responsible for the repayment of the loan. With the help of a co-signer, you can even secure a loan with a lower interest rate and a flexible repayment structure.

A family member or a friend may also be able to understand your situation and help you out with a loan. The fact that you borrow money from a close person does not mean that you should not adhere to the core principles of this financial practice. You should prepare a short and clear written agreement so that both of you can sign it. It is best to get the money via a bank account transfer.

Ready to apply? 

If you've checked your current affordability and used a loan calculator to determine your ideal loan amount and term then you're ready to apply! Below you have access to a collection of some of Australia's top bad credit lenders - from banks and credit unions to boutique lenders -you'll certainly find something to meet your needs.