"Bad credit" is one of the most loaded phrases in vehicle finance. It can mean a single late payment from 4 years ago, a default that's still on your file, a current paid-off bankruptcy, or just a thin credit file with not much history yet. The right lender for each of those situations is completely different — and the difference between getting approved and getting declined is usually about which lender sees your file, not whether you "qualify" in the abstract.
Here's what I tell every Brisbane customer who calls about a bad-credit car loan.
What lenders actually look at on a credit file
Most lenders run a comprehensive credit check that pulls four things:
- Credit score. A number between 0 and 1,200 (Equifax) or 0 and 1,000 (illion) summarising your overall file. Above ~700 reads as prime; below ~500 reads as non-prime.
- Repayment history (24 months). Whether you've paid your existing credit obligations on time. Late payments, missed payments and arrears are the biggest score-mover.
- Defaults and judgments. A default is a credit obligation more than 60 days overdue and over $150 (telco/utility) or $300 (credit). Stays on file for 5 years from when paid; 7 if unpaid.
- Recent enquiries. Each formal credit application leaves an enquiry on your file. Too many in a short window reads as desperation and lowers the score.
None of these things are dealbreakers on their own. The combination, the recency, and the explanation matter. Specialist non-bank lenders read these files every day and price them appropriately — they're not pretending the issues don't exist, but they're not declining the file outright either.
What specialist non-banks actually write
Major banks (Westpac, CommBank, ANZ, NAB) generally won't write car loans for files with unpaid defaults, recent judgments, or scores below 500–550. That's not a bias — it's just their risk policy. They write big volumes of clean files, so they don't need to take on non-prime risk.
Specialist non-banks do write that risk, at slightly higher rates. The most active ones for non-prime car loans are:
- Pepper Money — historically the biggest specialist non-bank. Writes paid defaults, low credit scores and ABN low-doc files.
- Liberty Financial — similar profile to Pepper, slightly different policy on certain default types.
- FinanceOne — specialist non-prime lender for tighter files including unpaid defaults and Part 9 debt agreements.
- Money3 — smaller-loan specialist; useful for sub-$15k car loans on harder files.
- Now Finance — personal-loan specialist that also writes vehicle finance on non-prime files.
A broker working a 40+ lender panel knows which of these will write your specific file. The difference between "approved" and "declined" is often just lender selection — not your file being inherently un-fundable.
What rates look like on a non-prime car loan
Honestly: higher than prime. A clean PAYG file on a newer car typically sees rates from around 5.89% p.a.; a non-prime file (paid defaults, score 500–650) typically sees rates from 8% to 14% p.a. depending on the lender and the asset.
That's the trade-off — access to finance that wouldn't exist via the major banks, at a rate that reflects the lender's risk. A working broker will quote you the rate honestly upfront, not lure you in with a "from 5.89%" promise that doesn't apply to your file.
How to improve a bad credit file over 6–12 months
If you've got time before you need the loan, here are five things that materially move a credit file in 6–12 months:
- Pay down existing credit cards to under 30% utilisation. Credit utilisation is one of the biggest score factors. Carrying a $9k balance on a $10k limit hurts the score; carrying $2k on a $10k limit barely registers.
- Don't apply for credit you don't need. Each application leaves an enquiry. If you're planning a car loan in 6 months, don't apply for store cards or buy-now-pay-later facilities in the meantime.
- Set up direct debits on every bill. Telco, utility and BNPL late payments default at $150. A direct debit avoids the human-error misses.
- If you have unpaid defaults, pay them. A paid default reads better than an unpaid one. Some lenders will only write paid-default files.
- Don't close old credit accounts. Length of credit history is a positive score factor. An old, low-limit credit card you don't use is helping your score just by existing.
Bad credit FAQs
Can I get a car loan if I'm currently in a debt agreement (Part 9)?
Often yes — specialist non-bank lenders (FinanceOne, Money3) write Part 9 files. Rates are higher and the lender will want to see at least 6 months of clean conduct under the agreement before approval.
What about if I've been bankrupt — when can I apply?
Discharged bankruptcy (typically 3 years from the bankruptcy date) is workable on specialist non-bank lenders. Pre-discharge is harder but not impossible on certain commercial-vehicle deals.
Will the broker pre-approval impact my credit score?
No — at Londy we use a soft credit check first, which leaves no enquiry on your file. A hard enquiry only happens when you formally apply with a chosen lender after seeing the indicative rate.
Should I wait until my credit improves, or apply now?
Depends on urgency. If you need the car for work and can pay the higher non-prime rate without strain, applying now and refinancing in 12 months when your credit improves is a common path. If you can wait and your circumstances are stable, working on the file first usually saves money long-term. We'll model both options.
How long does bad-credit car finance take?
Slightly longer than a clean file — typically 2–4 business days for assessment, settlement 1–2 days after that. Lenders ask more verifying questions on non-prime files; we coordinate the responses to keep things moving.
The short version
Bad credit doesn't mean no finance. It means specialist lenders, slightly higher rates, and a broker who knows which file goes where. Don't apply directly to multiple lenders — every rejected application leaves an enquiry that drops your score further. Talk to a broker who writes non-prime files every day, and you'll know the realistic answer in a single phone call.
Need a real read on your file? Call us on (07) 3130 1674 or drop your details — soft credit check only, no impact on your score.