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Can I Get a Car Loan After Bankruptcy?

May 19, 2020 7 minute read
Can I Get a Car Loan After Bankruptcy?

Understanding your car finance options

If you’ve declared bankruptcy and you need help financing a new car, it can be tough to know what to do. You can get a car loan after bankruptcy from specific financial providers that consider applicants who are currently bankrupt or have recently been discharged from bankruptcy. Yet, finding the right one may be tricky. Jacaranda Finance is a lender with a difference, we strive to give all our applicants a fair shot at finance. So, we may be able to help you get a car loan up to $35,000.

To help you understand your options, let’s run through some of the loans available for borrowers dealing with bankruptcy. You can also find out more information directly from the MoneySmart website.

Can I take out a loan if I’ve been declared bankrupt?

The short answer is yes. Some lenders may consider applicants who have been declared bankrupt or are tackling their bankruptcy. However, the lenders who do will most likely be limited and have fees and additional rates that are higher than traditional loans. You may also be required to attach an asset as security against the loan or have the application signed with a guarantor.

Applying for a car loan after bankruptcy: The risks 

Regardless of what your financial situation is currently, taking out a car loan or any other type of credit shouldn’t be done lightly. All loans come with risks but this is especially true if you’ve struggled with debt in the past. Here are some things to look out for when applying for a car loan after bankruptcy.

Unreputable lenders

While many online lenders are reputable, it’s important to always do your research. Before taking out any type of loan you should always check if the lender has a credit license. This should be the case, regardless of your financial position. You should also check the lender isn’t charging you higher than the allowed amount stated by ASIC and is easily contactable.

Unaffordable repayment amounts

Take into consideration the size of the repayments over the loan term and make sure you’re capable of meeting these payments over time. If you fail to make some repayments in full or on time, then you may get charged extra fees for extending the loan term. Keep in mind that repayment periods on loans for bankrupt or previously bankrupt borrowers tend to be shorter than normal loans. Additionally, bankruptcy may affect your available assets and income.

Submitting multiple applications

Every single loan application you submit will show up on your credit reports. Even if your lender might not consider your credit history, having several loan applications within a short timeframe may cause a negative outcome on your credit rating moving into the future.

Check all the rates and fees 

Even while knowing your establishment and monthly fees are capped, it’s best to be cautious of lenders quoting any additional prices that end up exceeding the legal maximum amounts. Always make sure everything is crystal clear with your lender regarding what the rates and additional fees are, as well as the late payment charges and loan default fees. Essentially, you want to pay attention to the overall cost of the loan as many lenders may charge additional fees on top of the standard interest rate.

Possible long-term consequences and legal trouble

Upon signing your loan agreement, you are completely bound to all its conditions until the loan and all its associated fees and rates have been paid in full. Usually, those loans are unsecured. This means that if you fail to make your payments, the lender can then initiate legal proceedings against you. This could result in additional costs for the lawyer and legal proceedings.

What types of bankrupt loans are available now?

If you need help with financing and you’re either currently bankrupt or have bankruptcy listed on your credit report, then these loan types may be available to you:

Personal LoanSome lenders may provide personal loans to people who have declared bankruptcy. However, this type of finance is usually restricted to specific types of purchases.
Business LoanEven if you’re currently bankrupt, you may be eligible to apply for a business loan. Business loans are a type of loan that is larger than normal loans. The amounts can range up to $500,000 and are created to help finance a wide range of business purposes.
Car LoanYou can get a car loan after bankruptcy from select lenders. Car loans are a type of personal finance and usually range between $10,000 to $50,0000, depending on the lender.

How can I get approved when applying for a bankrupt loan?

There are some factors to consider when applying for a car loan after bankruptcy. Your lender could place a range of criteria on their loan. Therefore, when taking out a car loan make sure you discuss the following factors with your lender directly to learn more about the specifics:


With different lenders, you’ll find that there are different criteria in place regarding a borrower’s employment. For example, lenders may require employment and income to be regular and ongoing. So if you’re self-employed or part-time/casual, it could be more difficult.


Although you could be considered for a car loan on Centrelink, there will be conditions.  Lenders will usually have restrictions regarding how much of your income is made up of benefits. For example, they may only accept applicants if their income is under 50% Centrelink payments.


Even if you’re bankrupt, you’ll still need to have a stable source of income to qualify for a loan. There will be minimum income requirements on any loan you apply for. Generally, your income must come from regular employment. However, some lenders can provide loans to people receiving Centrelink or other forms of government benefits. Under these circumstances, the payments will usually need to be regular to ensure you can afford the loan. For most lenders, you’ll need to show evidence of income with prior bank statements, usually from the last few months.


When taking out a car loan, lenders may need you to provide an asset of a certain value for security. This asset is considered collateral and it essentially guarantees that the loan will be paid back in full whether by your cash or through the repossession of the provided asset. Asset requirements will vary from lender to lender. As a result, it could be your home, car, or even expensive belongings such as jewellery or furniture.

Having the ability to manage all repayments 

One of the major requirements that lenders have when considering you for a loan is whether or not you’ll be able to pay it back. Your current income should be an indication of how you can manage your repayments while considering your other debts and bills. If you’re certain and confident with your steady income and your ability to make all repayments, then you may apply for a loan.


If you don’t meet all of the criteria provided by the lender, then you may want to apply for the loan with a guarantor. This can help increase your chances of getting approved for the loan.

How do I find a lender?

If you’re looking to get a car loan after bankruptcy, finding a lender can seem quite daunting. Fortunately, Pocket Cash is here to help! We’re an online lender-finding service that takes the hassle out of finding a loan. When you apply with us, we’ll search the internet for the lender most likely to approve your application. No application fees, no paperwork, all you have to do is fill out our online application!

Although we’ve previously specialised in personal loans, we can now help you find car finance options too. So if you need a new set of wheels, don’t hesitate to apply. While we can’t guarantee we’ll be able to find you a car loan after bankruptcy, we’ll work hard to find you a suitable lender.

Something to consider

If you find yourself in a stressful financial position and you’re unable to handle your debt, taking out a loan might not be the best option for you. Pocket Cash is a lender-finding service, we can’t provide professional financial advice. To ensure you’re tackling all your debt in the best way possible, consider speaking to a financial advisor or free financial counsellor first.

Remember, there is always someone to talk to and help available if you find yourself in emotional distress for any reason. Here are some contacts that can help:

  • National Debt Helpline: 1800 007 007 (open Monday to Friday from 9:30 am to 4 pm)
  • The Department of Human Services: Crisis and Special help
  • Lifeline: 13 11 14

Want to know more?

Enjoyed reading this article on how to get a car loan after bankruptcy? Find out more about our car loan options. We also have information on everything from car loan balloon payments to no-interest car loans. So, make sure you check out our blog for the latest!

How does a car loan balloon payment work? Find out with Jacaranda Finance!

Have you heard of no interest car loans? Learn more about how they work and what the risks are!

Personal Loan vs. car loan: how do they differ? Find out more!

Car Loan or credit card: Which should you pay off first?

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