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What credit score do I need for a car loan?

There's no minimum credit score you'll need for a car loan, but the higher your score, the better your chances of being approved.

Like with other types of loans, your credit score will influence your ability to get a car loan.

While there's no specific credit score you'll need to be eligible for a car loan, a higher score will boost your chances of getting approved, and can also give you access to better offers and interest rates.

It's also possible to get a car loan with bad credit, but you may find your loan options are much more limited.

What's the minimum credit score I need to get a car loan?

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 car finance.

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.

How does your credit score affect your ability to access car loans?

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.

If you have a bad credit file or any negative marks on your file, this will classify you as a risky borrower and could significantly limit your options in terms of getting a car loan.

Lenders like to know they are lending money to someone who has the capacity to repay back their loan, so if there are any marks on your file that indicate you may not be able to do so, this will limit your access to a car loan.

Do lenders always perform a credit check when I apply for car finance?

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.

Finder survey: How many Australians would apply for a loan or credit card if they knew their chance of being approved before they applied?

Very likely37.01%
Somewhat likely33.96%
Very unlikely6.59%
Somewhat less likely2.07%
Source: Finder survey by Pure Profile of 1016 Australians, December 2023

Car loan options with bad credit

If you do have bad credit, there are still some car loan options available that can help you buy a car:

  • Payday loans. Payday loans allow you to borrow a small amount of money over a short period of time. You can usually borrow between $100 and $2,000 and borrow the money for 16 days up to 1 year. Bad credit isn’t typically an issue with these types of loans. However, they do have a higher interest rate.
  • Bad credit lenders. Some lenders deal specifically in lending money to those with bad credit to help them purchase a car. Bad credit lenders take the risk associated with your bad credit as they specialise in this area. However, rates and fees tend to be higher again.
  • 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 so you have more options available to you.
  • Credit repair. Credit repair can assist you in finding and eliminating any errors on your credit file and widening your car loan options.

Improving your chances of being approved for a car loan

If you do have a bad credit rating, there are some ways you can improve the chances of being approved for a car loan.

  • Check your credit score. Regularly checking your credit file for any errors or mistakes can eliminate or repair any bad marks from your file that shouldn’t be there and improve your chances for approval.
  • Pay bills on time. Late payments of bills show up on your credit file. By ensuring you always pay your bills on time, you won’t have any more late payment marks on your credit rating and will improve your chances of being approved.
  • Consolidate debt. Consolidating your debt into one debt can assist you in improving your credit rating. This will make it easier to repay your debt and you may also get a lower interest rate. Controlling your debt will ultimately allow you to improve your chances in being approved for a car loan.
  • Control of your credit cards and spending. Controlling your credit cards and spending responsibly when using credit is one of the easiest ways to improve your chances of being approved. Make sure you don’t spend beyond your means, always make your repayments on time and stay in control of your credit.
  • Don’t apply for loans too often. Applying for loans too often and getting rejected affects your credit rating. Applying less, or only applying for loans you know you will be approved for, will improve your credit rating and your chances of approval.

Find out if you'll get approved before you even apply

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2 Responses

    Default Gravatar
    EjmJanuary 7, 2018

    Hi when applying for a car loan what is considered to be a good credit score please

      Default Gravatar
      AshJanuary 9, 2018

      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.


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