How to get 100% car finance with bad credit
To find no deposit car loans with bad credit, you need to look beyond the big four banks. Not all lenders offer them. However, some select and smaller lenders do. What you need to do is seek them out.
A good first step is to speak with a car finance broker. A car finance broker is a specialist in car loans. They have access to a variety of lenders, many of which offer bad credit car loans, some with no down payment options.
Your car finance broker could help you to find no down payment finance, even if you've experienced:
- Credit defaults
- Bankruptcy and part IX debt agreements
- Court Judgements and writs
- Telco and credit card defaults
- General bad credit
They can help you to prepare your case for finance by focusing on your financial strengths such as your job history, rental history, and income. They can also negotiate with lenders on your behalf, and even check your credit history for mistakes and assist in correcting them for free.
Securing 100% car finance with bad credit isn't always easy, but with the right help, it may be possible.
Find out more on our bad credit car loans page.
Can I borrow more? 125% or even 150% on top of the car price?
Yes. Depending on your circumstances you may be able to borrow more than 100%.
This is because, when it comes to cars, purchase price is often only the first of multiple expenses.
There's registration, insurance, extended warranties, fuel. And, if you're purchasing your vehicle for work then there's business decals, trade modifications, and more.
Which is why some loan products feature options to borrow more than the car's value. For example, 100% of the car's value, plus another 25% to cover other vehicle related expenses.
So, yes, not only are no deposit car loans with bad credit available but so too are loans where you borrow 125% or more of the asset's value.
Interest rates on bad credit car loans with no down payment
You may think that because you're applying for 100% car finance with bad credit that you can't get a decent interest rate. But that's not necessarily the case.
It could still be possible for you to get a competitive interest rate.
Typical bad credit car loan interest rates range from 10% - 20% p.a.*
And there are some things you can do to help you to get that figure down. Cleaning your finances, reducing your overall debt, and staying in stable employment can all help you to get a lower rate.
Note: these estimated interest rates are used for illustrative purposes. They may not reflect the lowest or highest rate available to you. For information specific to your situation, speak with a finance professional.
Common traps to avoid
When it comes to no deposit car loans with bad credit, there are some traps. However, with a little know-how, you can avoid them.
1. Don't pay more than 29.9%
In Australia, bad credit interest rates are generally capped at a maximum of 29.9% p.a. So if you are offered a rate higher than this, do not accept it, instead try applying with a more reputable provider.
2. Beware of low introductory interest rates
Some lenders offer a very low interest rate for an introductory period. Of course, when that period is over, they immediately ramp them up, often to extraordinarily high levels.
It's typically better to select an initially higher rate, which stays consistent across the life of the loan. Choose this option, and you'll usually pay less overall.
3. Avoid 'no credit check car loans'
In Australia, all car loan applications generally feature a credit check as part of the lender's due diligence. It doesn't matter if you have a down payment or no down payment. So despite what an advertisement may say, no credit check car loans are generally not available here.
A co-signer as an alternative
Another option for those seeking 100% car finance with bad credit is to use a co-signer or 'guarantor'.
A co-signer is someone who co-signs your finance agreement and thereby also takes on responsibility for the loan. In the event that you default on the loan, then your co-signer will be liable.
In this way, you are essentially able to leverage off of the co-signer's assets and good credit rating. And this may allow you to secure finance with no down payment.
However, we always advise caution when using a co-signer.
As stated above, the co-signer is liable should you default on the loan. And since co-signers are often family members or close friends, this can put undue strain on your relationships.
If you do choose to use a co-signer, always take the appropriate precautions, and ensure all parties are aware of the relevant risks.
You may be able to refinance later
Lives change and so do financial situations. Just because you have a less than straight forward credit history now, doesn't mean that it can't improve in the future.
Should your circumstances change then you may be able to refinance for a better deal.
This is something many bad credit borrowers take advantage of. They take no deposit car loans with bad credit now and then refinance when their position improves.
Refinancing could help you to get:
- A lower interest rate or lower fees
- More flexible features
- A different loan term
- A co-signer removed
- Update or downgrade your car
So, remember, you don't have to stick with the car loan you get today. If things change your loan can too.*
*Refinancing will incur relevant fees and charges.
"Securing 100% car finance with bad credit isn't easy, but with the right help, it may be possible."
Thinking bad credit car loans? Think Rapid Finance.
At Rapid Finance, we are your bad credit car finance specialists. Every day, we help Australian drivers to get past their bad credit and to get back on the road. It's what we do!
We could help you, even if you've experienced credit defaults, bankruptcy, or part IX debt agreements. We make seeking out no deposit car loans with bad credit, fast and easy.