A car loan is a big responsibility that could leave you with a sizeable monthly commitment and a big debt of interest to the lender. If you have bad credit, that weight of responsibility will feel even heavier.

But if you need a car, you need a car. It’s as simple as that. And while bad credit can make your life more difficult, it won’t exclude you entirely. There are options, and one of the most important considerations is the car that you choose.

Picking the right car could turn a rejection into an approval, and it could make a bad credit car loan considerably more manageable. So, how do you choose the right car when applying for a bad credit auto loan?

What Makes a Good Car for Someone with Bad Credit? 

The loan is more important than the car, as it’s the loan that will determine what rate you get, how much you can borrow, and how much you repay. But the car also plays a big role.

If you’re buying a new and expensive vehicle, for instance, you’ll struggle to get accepted for car finance. You may need to find a sizeable down payment, and even then, there is no guarantee.

The goal, therefore, is to find a vehicle that meets the following criteria:

Cheap to buy

The average price of a new car in Australia is between $40,000 and $50,000, and that price is rising. If we take a vehicle at the higher end of that range and assume a standard deposit of 20%, it means you need to find $10,000 in cash and pay anywhere from $791 to $908 (for a 5-year term with an interest rate of 6% to 12%).

If you had that sort of money at your disposal, you probably wouldn’t have poor credit. And it’s irrelevant if you do, as few lenders are willing to loan $40,000 to bad credit borrowers.

Alternatively, if you find a vehicle for $15,000, the down payment will be just $3,000 and the monthly payment will vary from $249 to $285 based on the same criteria as above. It’s reasonable, it’s manageable, and it’s more likely to be accepted by lenders.

Cheap to run

A poor credit history can be fixed with a little hard work and a lot of time. You need to pay down more of your debt, avoid applying for too many new credit cards and personal loans, and keep making your monthly payments on time. But it won’t be easy to do any of that if you’re spending a king’s ransom on car insurance and fuel.

The less you spend on the vehicle, the more money you’ll have to rebuild your credit report and get your score back on track.


Borrowers with bad credit scores rarely have the luxury of spending several grand on repairs and maintenance. The best car, therefore, should be reliable. It should get you where you need to go without constantly breaking down and leaving you with unexpected expenses.

Should I Buy a New or Used Car? 

It may be difficult to get a loan for a new car if you have bad credit.

There are certainly some benefits to buying new, including a longer warranty, less maintenance, and your own choice of features and specs. The interest rate is usually lower as well. But all of those benefits come at a cost, and that cost creates a sizeable risk for the lender.

It depends on how “bad” your credit is and how high your down payment is, but if you’re in the market for bad credit auto loans, you should probably limit your search to affordable used cars.

What is the Best Car for a Bad Credit Car Loan?

Your budget, needs, and preferences will determine which car is best for you, but here is a list of the most popular cars in Australia right now, all of which fit the categories outlined above.

  • Toyota Corolla: You can find many 2018 Corollas for around $25,000. They’ll likely have at least 60,000 km on the clock, but it’s a reliable car for a reasonable price.
  • Hyundai i30: A very popular and affordable car. Models from 2008/09 are available for less than $5,000 while newer ones can be picked up for less than $20,000.
  • Kia Cerato: At $4,000, you might not need a car loan to purchase a 2005 Kia Cerato. But recent models are also very reasonably priced, with high-spec 2017/18 models going for under $20,000.
  • Kia Picanto: You can get a brand-new Picanto for less than $20,000. Alternatively, models from 2018/19 are available for between $10k and $15k.
  • Toyota HiLux: This is one of Australia’s most popular vehicles, selling thousands of units a year. Top spec models cost up to $70,000, but basic used models are available for less than half that amount.

Can I finance a car with a 480 credit score? 

It depends. There is no minimum credit score requirement across the industry, but many lenders have their own policies and may refuse you if your score is this low. Some may charge you a higher interest rate to account for the additional risk.

You can still get a car loan with bad credit, it’s just not as easy.

Can everyone get a car loan? 

Just because you have been rejected by multiple lenders doesn’t mean you’re out of luck. You may still have some options.

Lenders seek assurances that you are financially responsible and can repay the debt. If you are employed and have a stable income, you can provide those assurances. If you’re unemployed, you may be okay as long as you have another source of income.

Speak with one of the lending specialists at Ume Loans for more assistance.

The Best Cars for Bad Credit Car Loans

Bad credit can limit your options, but it shouldn’t prevent you from getting a car loan. However, you may need to make more sensible choices, opting for a used vehicle that has a few extra digits on the clock and won’t cost you a fortune in fuel and maintenance.

To get help finding the perfect bad credit car loan, contact one of our specialists. We work with have helped countless consumers in the exact same position as you. We’ll answer any questions you have, guide you through the loan process, and ensure you get the finance you need.