Lowest Credit Score for a Car Loan in Australia

Two questions we get asked often are "What's the minimum credit score for a car loan? or "Is there a minimum credit score for a car loan?" In this article, we answer your question about car loans and credit scores and hopefully provide some clarity for those of you looking to secure car finance. 

When it comes to applying for a car loan in Australia, one of the most important factors that lenders consider is your credit score.

Put simply, a credit score is a creditworthiness rating attributed to you by a credit reporting body or agency. In Australia, there are three main credit agencies: Equifax, Experian, and Illion. All three of these agencies hold up-to-date financial information about you in their credit reports and using their own calculations, allocate you a credit score.

The resulting credit score, also known as your credit rating, represents your profile as a borrower. It is based on your credit history and includes things like the number of accounts you have open, your past and current debts, and your repayment history. This information is supplied to the credit agencies by providers.

If you have ever applied for or received credit of any kind, you will have a credit score. and it will fall between  0 or 1,000 or 0 and 1,200, depending on the credit reporting body.

For your reference here are the different credit score ranges provided by each of the 3 main reporting agencies used by lenders.

Is there a minimum credit score for a car loan in Australia?

 The answer is yes, there is a minimum credit score that lenders typically look for when assessing car finance applications. With that said, the exact minimum credit score requirement to qualify for a car loan varies between lenders. 

As a general guide, lenders typically look for a credit score of at least 600 to 620 when considering car loan applications.

However, with over 50 lenders in the car finance space, including sub-prime lenders (lenders who specialise in providing loans to consumers with poor credit histories) the minimum credit score required for a car loan can be much lower, with some lenders considering credit scores below of around 550.

On the other end of the scale, some lenders may have higher minimum credit score requirements, especially for those looking to finance a luxury vehicle or for those who are looking to get a loan with a longer repayment period.

It's also important to note that having a good credit score is not the only factor that lenders consider when assessing car loan applications.  Lenders will also take into consideration things like your employment history, income, the amount you are requesting for the car loan, and of course the age and condition of the vehicle you are looking to finance.

To learn exactly what car finance lenders are looking for in 2023 make sure you check out our related post: Car Loan approvals - 5 things lenders are looking for in 2023

If your credit score is below the minimum required by the lender, you may still be able to get approved for a car loan, but you may have to pay a higher interest rate or put-up collateral such as a deposit or a co-signer.

It's also important to remember that you can take steps to improve your credit score before applying for a car loan. This can include paying your bills on time, reducing your credit card balances, and correcting any errors on your credit report.  

In fact, there are many simple things you can do today to avoid making common mistakes people make when applying for a car loan and elevate your credit score so be sure to check out our guide to improving your credit score and follow our tips.  

Getting a car loan doesn’t need to be a difficult exercise and at Ausloans we make it easy. With a large panel of lenders, we have a car loan solution that will fit your credit profile, needs, and budget so take action today and hit the button below.