There is no specific credit score that you'll need to be eligible for a car loan, but having a "good" credit score or better will improve your chances of getting approved.
However, as most car loans are secured loans, a bad credit score won't necessarily rule you out of being approved for a loan.
In fact, less than 6% of Australians have had a car loan application rejected, according to Finder data.1
Having a good credit score can also make you eligible for lower interest rates and better loan terms, so you should make sure you've done everything you can to improve your credit score.
Your credit rating will directly affect your ability to access most loans and car loans are no different. It is normal for banks and lenders to check your credit file during the application process before they approve you for a car loan.
Lenders like to know they are lending money to someone who has the capacity to repay back their loan. If you have a bad credit file or any negative marks on your file, this will classify you as a risky borrower and could limit your options in terms of getting a car loan.
Thankfully, you can still get a car loan even if you have a poor credit rating.
Some lenders may still approve you for a car loan as long as you meet the other eligibility criteria (like minimum income and age), but may offer you a higher interest rate or limit the amount you can borrow.
Of course, there is a chance you could be rejected, so it's important to have a back-up plan.
One option could be to opt for a cheaper car that you can pay for in cash, or by taking out a smaller loan.
Another idea could be to wait until any bad marks are removed from your credit rating.
Your credit rating doesn't remain on your record forever. If you can wait to purchase a car, consider waiting until the bad marks are removed from your credit rating, which should improve your chances of getting approved.
Yes, when you apply for a car loan the lender will apply a "hard" credit check, which will appear on your credit report and can impact your credit score.
Having too many hard credit checks on your credit file can significantly damage your score, so it's important you don't apply for too many loans in a short space of time.
| Response | |
|---|---|
| Very likely | 37.01% |
| Somewhat likely | 33.96% |
| Neutral | 20.37% |
| Very unlikely | 6.59% |
| Somewhat less likely | 2.07% |
If you do have a bad credit rating, there are some ways you can improve the chances of being approved for a car loan.
Credit Repair Australia can help you sort out your credit score and improve your chances of getting a loan or credit card.
Missing a phone bill can end up hurting your credit score, but simply having a mobile plan won't impact your credit report.
The average Australian has a "very good" credit score according to Finder analysis. Here's how credit scores are categorised in Australia, and how to check yours.
Credit reporting bureaus issue credit reports and scores to consumers and lenders. Discover how they work in this guide.
Placing a ban on your credit report can help to protect you from fraud. Here's how to request and extend bans with Experian, Equifax and ilion in Australia.
If you're planning to cancel a credit card, here's what you need to know about the impact it could have on your credit score.
9 things you can do today to start improving your credit score.
How to remove incorrect negative listings from your report and adopt positive money habits to get your credit history back on track.
How to remove enquiries from your report in 4 steps and a guide for improving your credit score.
Discover how you can use a credit card to build or repair your credit history.
Hi when applying for a car loan what is considered to be a good credit score please
Hello Ejm,
Thank you for reaching out to us.
You may refer to our guide on what is a good credit score?. To buy a car, a good credit score is normally above 620. However, there is no “official” industry-wide minimum credit score in order to qualify for a loan. You will not automatically be ruled out for a loan if you have a low credit score but you may face higher interest rates.
Learn more about car finance and credit scores to know how does your credit affect your ability to access car loans.
I hope this helps.
Let us know if there is anything that we may assist you with.
Cheers,
Ash