It can be difficult to get a loan from a bank with a bad credit history, but there are some bad credit loan options available. If you're unemployed and looking for a loan you can read our guide here.
If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call the Financial Counsellors hotline on 1800 007 007. It is open from 9:30am to 4pm, Monday to Friday. When comparing short term loans, ensure you take into consideration any fees, charges and rates you may be charged. It's important to weigh up all your options before applying for any form of credit.
⚠️ Warning about Borrowing
Do you really need a loan today?*
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94
The Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.
* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.
Compare these bad credit loan options
Cash Converters: Borrow up to $4,600 and get the funds within 48 hours of approval.
Wallet Wizard: Access your funds as a line of credit. Bad credit and Centrelink borrowers considered.
Nimble: Apply for up to $5,000 online with this loan.
Swoosh Finance: Find out if you have been conditionally approved for a bad credit loan within 60 seconds.
Which companies offer bad credit loans up to $5,000?
There are various options when it comes to finding bad credit loans up to $5,000. Click through to the review page to find out more details on the loan.
Find out more
Fair Go Finance
$500 to $10,000
Earn at least $500 per week
Only considers Single Parent, Family Tax Benefit and Carer's Allowance for Centrelink income
Employed on a casual, part-time or full-time basis
Bad credit and self-employed applicants are considered
$500 to $5,000
Bad credit, Centrelink and unemployed applicants are considered
$2,001 to $5,000
Good to Go Loans
$500 to $5,000
Receive regular income
Centrelink borrowers considered
$5,001 to $100,000
Bad credit borrowers are able to apply
Bankrupt and Part 9 borrowers can apply provided they haven't entered into the bankruptcy/Part 9 in the past 12 months
How bad credit affects taking out a loan
There are some important points to consider before applying for a loan with bad credit.
Check the eligibility criteria before applying. Lenders have set eligibility criteria that can be checked via the Finder review pages. Check the criteria online, if it's still not clear call the lender to discuss the situation.
Order a credit report. A credit report is the most up-to-date and accurate recording of a person's financial history and this is what lenders use to judge creditworthiness. You can order a full credit report for free with Finder.
Compare options before applying. Every application for credit you make shows up on your credit history so it's best not to make numerous applications at the same time. It's also important to be crystal clear on the fine details of the loan before making an application or taking out a line of credit.
Bad credit loans work in a similar way to standard personal loans, except with different fee and interest rate structures. These loans are more expensive because the lenders need to offset the risk of lending to those with adverse credit histories.
The applicant's credit history may or may not be checked (this will be disclosed by the lender beforehand) and as a result bad credit may not disqualify an applicant from having a loan approved.
Understanding bad credit
Generally, if someone has any black marks on their credit file (defaults or bankruptcies, for example) it's safe to assume they have some degree of "bad credit". However, as the degree of "bad credit" does vary between people, one of the easiest ways to check if you have bad credit is by checking your credit report and credit score, which you can do for free with Finder.
When you check your credit report you should look out for bad credit listings such as defaults, bankruptcies, late payments and excessive credit enquiries. Your credit score will also give you a good indication of where you sit. The credit score you receive from Finder is from Experian and will be a number between 0 and 1,000. You can see a breakdown of the credit score ranges below from both Experian and Equifax – the lower your credit score, the more likely it is that you have bad credit.
Options for an unsecured $5,000 loan with a good credit rating
For people who don't have bad credit they're likely to be eligible for a loan from a bank, credit union or standalone lender at a more competitive rate than bad credit loans. For example they may be able to borrow up to a limit of $5,000 and not have to attach an asset as a guarantee.
Updated October 20th, 2019
Compare bad credit loan options below if you need to borrow $5,000
Updated October 20th, 2019
How much do $5,000 loans cost?
If you're borrowing from a non-authorised deposit-taking institution, which is basically any lender that isn't a bank, credit union or building society, you'll be charged the following:
Loans under $2,000. You will be charged a 20% establishment fee and a 4% monthly fee. Both fees are calculated using your loan principal.
Loans of $2,001 to $5,000. These loans are repaid over 16 days up to 2 years. You cannot be charged more than a one-off establishment fee of $400 and a maximum annual interest rate of 48% p.a. which includes all other fees and charges.
Loans over $5,000. You cannot be charged more than 48% p.a. including all fees and charges.
What to remember when comparing $5,000 loans
Online applications The convenience of online application forms and quick approval systems can save time. They also offer the opportunity to compare a range of credit providers.
There are minimal or no credit checks It's common to have difficulty being approved for a personal loan from other credit providers with a bad credit history. Getting a bad credit loan gives you access to lenders that look at your current financial situation when considering you for a loan. If you have major credit problems you can consider a no credit check loan. However, it's important to remember that bad credit loan lenders generally charge high fees.
Repayment terms Some lenders may offer options of how to make repayments and direct debit repayments are offered by most lenders.
Bad credit loans are high cost Due to the high risk of this loan, the lender will usually charge higher fees. However, keep in mind fees are capped by the Australian Securities and Investments Commission (ASIC).
Loans over $2,001 come with high interest While loans under this amount do not come with interest rates (only set fees), loans above this amount come with rates maxed at 48% p.a.
Disreputable lenders operate in the bad credit loans space There are many disreputable lenders operating online that prey on people with bad credit, so it's important to thoroughly research the lender in question and consider if a bad credit loan is the best approach to the situation.
Things to watch out for with bad credit loans
There are quite a few risks associated with loans for people with bad credit:
High fees and inflexibility. ASIC has issued a warning to people intending to take out bad credit personal loans. These loans typically come with high fees and inflexibility from the lenders.
Is it realistic? It's vital that anyone considering applying for a bad credit loan up to $5,000 considers how they intend to repay the loan. Repayment periods are a lot shorter than standard loans which means repayments will be quite high. Lenders usually offer calculators to show an indication of your repayments so it's a good idea to run the numbers before committing.
Not considering the fees as well as the interest rate. Lenders may charge an interest rate as well as fees and other charges. Check these before applying and consider the total cost of the loan.
*Average repayment based on a $30,000 loan over 3 years | ^ based on a $3,000 loan over 220 days | ~ based on a $1,000 loan over 32 days
Frequently asked questions about bad credit loans
How do I apply for a bad credit loan?
You can apply to any of the lenders on this page by clicking "Go to site". If you don't see this button, apply directly on the lender's website.
What happens after I send my application?
This will differ between lenders, but typically applicants receive a notification of approval (or not) along with further instructions for the next steps.
Are my details secure?
When you apply for a bad credit loan online up to $5,000, your details are securely transmitted over an encrypted connection. The majority of sites you apply at use 128-bit SSL encryption to ensure your details are safe and secure.
Can I get a $5,000 loan if I'm unemployed?
When an institution lends you money, it wants to be certain that you can repay the debt within the allocated timeframe. For people who are not employed, their income may be limited unless they are receiving Centrelink benefits. If the majority of income comes from Centrelink payments, they may still be eligible for a personal loan. Please read our guide to getting a loan on Centrelink before applying.
Matt Corke is the head of publishing in Australia for Finder. He previously worked as the publisher for credit cards, home loans, personal loans and credit scores. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time he has survived the dot-com crash and countless Google algorithm updates.
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