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Bad Credit Personal Loans in Australia

Bad credit loans are an option if you need money urgently, but keep in mind they can be expensive and are not a long term solution.

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By

Richard Whitten

Updated

Fact checked

What you need to know

  • Many borrowers can get a personal loan with a bad credit score, but the interest rate will be higher.
  • Payday loans are easier to get than personal loans if you have bad credit, but these loans are more expensive and have very high rates.
  • You can improve your chances of getting a personal loan (and get a better rate) by improving your credit score.

⚠️ Warning about Borrowing

payday-warningDo 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 loans for bad credit borrowers

Borrowers with bad credit scores can still qualify for a range of personal loans and other products.

The type of loan you can get, and the rate you'll receive, depends on the following:

  1. How much you want to borrow.
  2. How strong your credit score is (there's good, bad and then there's very bad).
  3. Your income.

This leaves most bad credit borrowers with 2 options: a risk-based personal loan with a higher interest rate or a payday loan with an even higher rate.

Risk-based personal loans

  • Lenders will base your interest rate on how risky a borrower they think you are. They will look at your credit score, your bill and credit paying history and your regular income
  • You can borrow more with a longer term with a personal loan.
  • This is your best option if you want to borrow a larger amount (above $2,000), but borrowers with very bad credit might struggle to get approved.
  • Approval typically takes between 1 hour and 2 days.

Payday loans

  • Payday lenders' eligibility criteria are more flexible, making these loans easier to get for borrowers with bad credit.
  • Payday loans are a short-term solution at best and get very expensive. These loans don't have interest rates but charge hefty fees (up to 20% of the loan amount upfront plus a 4% monthly fee).
  • The maximum amount you can borrow is $2,000.
  • Payday loans offer quick cash for borrowers in difficult circumstances, but this often gets you into more financial trouble.

Instead of a payday loan, you may be able to get a safer alternative, like a no-interest loan. More on that below.

Compare loans that accept bad credit scores

1 - 4 of 4
Updated regularly
Name Product Maximum loan amount Term of Loan Turnaround time Arrears Fee Costs Fortnightly Repayment (for $1500 Loan)
Sunshine Short Term Loans
Sunshine Short Term Loans
$2,500
9-20 weeks
30 minutes - conditions apply
$35
20% of loan amount + 4% of loan amount each month
$396
A small loan up to $2,500 that you repay over 9-20 weeks. Loans approved and funded in as little as 30 minutes. Centrelink must not be your primary income
Go to site
More Info
Nimble Small Loan
Nimble Small Loan
$2,000
62 days to 9 months
1 hour - conditions apply
$15
20% of loan amount + 4% of loan amount each month
$396
A loan up to $2,000 with terms up to 62 days to 9 months. Centrelink cannot be your primary source of income.
Go to site
More Info
Fair Go Finance Small Loan
Fair Go Finance Small Loan
$2,000
3 to 12 months
24 to 48 hours
$35
Establishment Fee of $60 – $400
$354
A small loan between $500 and $2,000 that can be funded in 24 hours.
Go to site
More Info
Fair Go Finance Medium Personal Loan
Fair Go Finance Medium Personal Loan
$5,000
7 to 19 months
Within 24 hours
$35
Establishment fee of $437 to $771
A larger loan up to $5,000 you can apply for even with bad credit. Fast turnaround within 1 business day. Note: You must earn more than $500 per week.
Go to site
More Info
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1 - 3 of 3
Updated regularly
Name Product Maximum loan amount Term of Loan Turnaround time Arrears Fee Costs Fortnightly Repayment (for $1500 Loan)
Nimble Medium Loan
Nimble Medium Loan
$5,000
62 days to 48 months
1 hour - conditions apply*
$15
Application fee of $400 + 47.62% p.a. for $2,050 to $5,000
Apply for up to $5,000 and have up to 48 months to repay.
Go to site
More Info
Fair Go Finance Medium Personal Loan
Fair Go Finance Medium Personal Loan
$5,000
7 to 19 months
Within 24 hours
$35
Establishment fee of $437 to $771
A larger loan up to $5,000 you can apply for even with bad credit. Fast turnaround within 1 business day. Note: You must earn more than $500 per week.
Go to site
More Info
Fair Go Finance Large Personal Loan
Fair Go Finance Large Personal Loan
$10,000
14 – 24 months
Within 24 hours
$35
Establishment fee of $546 – $795
Apply for a loan up to $10,000 and have up to 2 years to repay. Bad credit and casually employed borrowers considered. Note: You must earn more than $500 per week.
Go to site
More Info
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How much more expensive are bad credit personal loans?

Personal loans come with different interest rates for each borrower, based on their credit score. This is called risk-based pricing.

Generally, the poorer your credit score, the higher your interest rate. Here's a quick example.

  • Borrower A has a "very good" credit score and applies for a $3,000 loan with a 1-year loan term.
  • Borrower A's lender approves a $3,000 loan with a 12% interest rate and a $200 establishment fee.
  • Borrower A's total loan cost (interest and fees) over 1 year is $3,399.
  • Borrower B has a "fair" credit score and applies for a $3,000 loan with a 1-year loan term.
  • Borrower B's lender approves a $3,000 loan with a 24% interest rate and a $200 establishment fee.
  • Borrower B's total loan cost (interest and fees) over 1 year is $3,604.

Use a personal loan calculator to work out your loan's cost before applying.

Maximum fees and charges on short term loans

By law, payday lenders cannot offer loans under $2,000 that must be repaid in 15 days or less.

There are also fee and rate caps for similar short term loans:
While every lender is different, by law the following is the maximum you can be charged:

Type of loan

Fees and charges

Loans under $2000, with terms between 16 days and 12 months
  • Establishment fee. 20% of the loan amount
  • Monthly fee. 4% of the loan amount
Loans between $2,001 and $5,000 with terms between 16 days to 2 years
  • Establishment fee. $400
  • Maximum interest rate. 48% p.a., including all other fees and charges.
Loans between $2,001 and $5,000 with terms over 2 years
  • All fees and charges cannot exceed 48% p.a.

This category includes any loans above $5,000 and loans below $5,000 that have a loan term of over 2 years.
source

How your credit score affects your personal loan options

When applying for any kind of loan, lenders want borrowers who have demonstrated a long, stable history of repaying debts and staying in full-time employment.

Lenders don't want to see the opposite: missed bills, defaults on loan payments, outstanding credit card debts or a patchy employment history.

Lenders can get a good sense of your personal financial history and behaviour through your credit score. And you can too. Checking your credit score through Finder is free and takes just a few minutes.

Check your credit score for free

Understanding your credit score

Different credit rating agencies have slightly different scoring methods based around 5 bands or categories. If you checked your score through Finder, these are the bands you'll see.

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A higher credit score is better. It makes it easier to qualify for a home loan and unlocks lower interest rates on personal loans.

  • Very good or excellent credit score = lower rates, and lower rates = cheaper loan repayments.

You develop a good credit score over time by demonstrating a history of positive credit behaviour. This includes doing the following:

  • Paying bills on time.
  • Making regular repayments on debts (like a credit card).
  • Keeping the limit on your credit card low (and don't have too many credit cards).

You can end up with a bad credit score if you do the following:

  • Miss bill payments.
  • Default on a payment.
  • Have multiple outstanding debts.
  • Apply for multiple credit cards or loans in a short time.
  • Have unpaid buy now, pay later debt.

Some actions are worse for your credit than others

Missing a payment here and there and quickly making it up usually won't hurt your credit score.

According to the Office of the Australian Information Commissioner, "You are considered to have missed a payment if you make the payment more than 14 days after the due date." Then it goes on your credit report for 2 years.

According to credit agency Equifax, "Even a $5 account paid late" can end up on your credit score.

But a missed payment's impact on your credit is minimal compared to a default. A default is recorded if you miss a payment worth $150 or more for at least 60 days.

Source: https://ccr.equifax.com.au/resources/explaining-the-difference-between-a-late-payment-and-a-default-to-your-customers

https://www.oaic.gov.au/privacy/credit-reporting/repayment-history-and-defaults

What else do lenders look at when assessing bad credit loan applications?

Lenders look at much more than your credit history when you apply for a personal loan. You could have a perfect credit score and still get rejected for a $10,000 personal loan if your income is too low and you don't have security.

And if you do have bad credit, meeting a lender's other criteria will help your application.

Lenders examine the following:

  • Your income. Most lenders have a minimum income requirement before they'll lend to you.
  • Your age. You'll need to be over 18.
  • The amount you're trying to borrow. Larger loan amounts are naturally higher risk.
  • The length of the loan. Your loan term affects your monthly repayments.
  • Whether you have security or not. If you have an asset to back the loan (such as a car), you may be able to get a lower interest rate.

How can I increase my chances of getting a personal loan with bad credit?

Having bad credit makes it harder to get a loan approved. But there are several ways to boost your chances.

  • Apply for a smaller loan. It's easier to get approved for a smaller loan.
  • Apply with a guarantor. A loan guarantor is someone, often a family member, with good credit and a stable income who can support your application. If you can't repay your debt, the guarantor may have to.
  • Offer something as security. If you have a property or asset to back your application, you can get a secured personal loan. You'll boost your chance of approval and get a better rate.
  • Check all eligibility requirements before applying. Read the lender's website carefully before applying to make sure you're actually eligible for the loan. Send the lender an email or call to check if you're not sure it's suitable.
  • Improve your credit score before you apply. Taking simple steps to boost your credit score before applying will put you in a better position.

5 tips to improve your credit score

No matter how bad your credit score is, there's always something you can do to fix it.

  1. Pay any overdue bills first. Prioritise unpaid bills that are at risk of being listed as missed payments or defaults.
  2. Lower your credit card limit. If you have a credit card, dropping the card's limit will lift your credit score.
  3. Demonstrate a history of paying off debts. This means making regular repayments on any loans or card debt.
  4. Limit the number of debts you have. If you have multiple credit cards, consider combining them into one using a balance transfer credit card. If you can stick to one card and pay it off consistently, this will look much better on your credit report.
  5. Fix any errors on your credit report. Sometimes there are mistakes on your credit report. If you think there's an inaccurate default or other red mark on your report, you can apply to get it fixed.

Alternatives to bad credit personal loans

If you need cash quickly and have bad credit, you have other options. Some of these alternatives may work out cheaper than a personal loan.

Pay-on-demand apps

  • Pay-on-demand apps let you borrow some of your next pay cheque in exchange for a fee.
  • Fees are usually a percentage of the money you've borrowed (e.g. 5%) or a flat fee. Calculate the fee before applying.
  • While less risky than some loans, keep in mind that using pay-on-demand apps means your next pay cycle will be smaller because of the loan and the fees involved.z

Peer-to-peer loans

  • Peer-to-peer lenders are online platforms that connect individual investors to borrowers. It's quick and you get a personalised, risk-based rate.
  • You may be able to get a lower rate than with a traditional loan and have an easier time getting approved.
  • You may not be able to borrow as much with this kind of finance.
  • Make sure you check what kind of upfront and monthly fees you have to pay.

No Interest Loan Scheme (NILS).

  • NILS are interest-free loans offered by community organisations to help Australians on low incomes. You can borrow up to $2,000 to cover various essential needs.
  • These loans don't have fees or interest charges but are not cash loans. You usually receive a cheque to use at a specific store, and there are limits on what you can use a loan for.
  • You'll need a Health Care Card, Pensioner Concession Card or an annual income under $45,000 after tax to qualify and meet other requirements.

Source on NILS conditions: https://moneysmart.gov.au/loans/no-interest-loans

Advance payments via Centrelink

  • If you receive any benefits via Centrelink, you can apply for an advance on a payment. This means your next payment will be smaller.

Buy now pay later

  • If you need a loan to purchase specific items, the seller might offer buy now pay later options. This allows you to buy an item and pay it off in instalments.
  • You don't pay interest on buy now pay later purchases as long as you can make the repayments. Be sure to factor in late payment fees and account fees the provider may charge.
  • Buy now pay later is a form of credit. Regularly using buy now pay later and missing payments could harm your credit score.

Frequently asked questions about getting a personal loan with bad credit

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32 Responses

    Default Gravatar
    MichellDecember 9, 2018

    I have a 300 credit score and 2 defaults needing a loan

    Reply
      AvatarFinder
      JohnDecember 12, 2018Finder

      Hi Michell,

      Thank you for reaching out to finder.

      We are on the correct page for you to make a comparison on a table of providers in taking out a loan. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. Hope this helps!

      Cheers,
      Reggie

      Reply
    Default Gravatar
    TenealDecember 11, 2017

    Im wanting a provider who will help with a 15000 car loan with a poor credit raiting

    Reply
      AvatarFinder
      MayDecember 12, 2017Finder

      Hi Teneal,

      Thank you for your inquiry.

      Though I can’t recommend one specific lender to you as we are a comparison website, you may be able to compare some lenders that offer car loans with bad credit. Please review the criteria and get in touch with the lender directly for the possible options available to you. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.

      Hope this helps.

      Cheers,
      May

      Reply
    Default Gravatar
    RebeccaOctober 18, 2017

    I have 2 defaults on my name from a stuiped furniture company, I gave back there furniture in excellent condition, and the defaulted me 2 times of $1400 I’m still paying them off, and I have a variable impact from Telstra on my name.
    I’ve been approved for a $600 loan and almost done paying it off, I am I need of a $2000 loan where can I get one? Also I’m working and on single parenting

    Reply
      AvatarFinder
      JudithOctober 18, 2017Finder

      Hi Rebecca,

      Thanks for contacting Finder.

      You can check our list of payday loans for single parents. On the page, is a comparison table you can use to see which lender suits you. You can click the name of the lender or the “More info” link to be redirected to our review page and learn more about the lender’s loan offer, rates, and requirements as well as the pros and cons of using their loan service. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.

      I hope it helps.

      Best regards,
      Judith

      Reply
    Default Gravatar
    johnOctober 31, 2016

    Hi i currntly have car on fianance that i have been paying for the past year and have not missed or made a late payment a d now i a inneed of a $5000 loan for repairs but my credit rating is not so good i have bee employed for over 6 years fulltime is there any lenders that will give the amount i am after thanxs

    Reply
      AvatarFinder
      DeeOctober 31, 2016Finder

      Hi John,

      Thanks for your question.

      For your borrowing needs, you may want to consider the lenders on our $5,000 personal loan page. Please do check the eligibility criteria of the loan product you are interested in before submitting an application.

      Cheers,
      Anndy

      Reply
    Default Gravatar
    jpSeptember 12, 2016

    So I need a loan in the amount of 3400 dollars to pay off all my debt and I’m self employed and I’ve applied to many but all declined.

    Reply
      AvatarFinder
      ElizabethSeptember 13, 2016Finder

      Hi JP,

      Aside from the loans above, check out our page about $5,000 personal loans for you to compare your bad credit loan options for up to $5,000.

      Keep in mind that every time you apply for a loan, it is listed on your credit file and too many rejected applications can be a bad sign to lenders. You may want to consider waiting before you apply for another one to give yourself a better chance of being approved.

      Hope this helps,

      Elizabeth

      Reply
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