What is a good credit score for a low rate car loan?

two women driving a car

It’s no secret that your credit score can affect the interest rate you might receive on a car loan. And in some cases it might impact your chances of getting a loan at all. 

But the question is, what exactly is a “good credit score” to get your hands on a low-rate car loan? 

Well, that’s up to the lender. 

You may have heard of tiered car loan interest rates. This is where a car loan lender advertises a loan with a range of rates attached to it, the lowest on offer being available to those with an excellent credit rating and the highest for those with a more unhealthy credit rating. Although, for those with bad credit rating this is still within reason, so remember that it’s up to the lender to decide whether or not to offer you a loan at all. 

When you apply for the loan, the lender will assess your credit history and rating, and may offer you a rate that depends on that assessment - this is also known as risk-based pricing

Generally speaking, your credit score will range between 0 to 1,000 or 1,200 and the higher it is the better. Essentially, if you have a high credit rating it means that your credit history shows you are less of a risk to potential lenders, which means you’re more likely to get a lower rate.  

How can I check my credit score?

Before applying for a car loan, it’s always a good idea to check your credit score. 

According to moneysmart, every three months Aussies are entitled to a free credit report from each of the three major credit reporting agencies in Australia: Equifax, Experian and illion. 

You can access these online, via email or mail, or over the phone.  

It’s important to remember that each agency may hold different information, so it could be worth getting in contact with all of them to ensure you’ve got all the info you need. 

Can I get a car loan with bad credit? 

Yes, you may be able to. 

While it may sound like tiered rates are in favour of car loan seekers with an excellent credit rating, they can also benefit those with a worse credit score too, if a lender decides to offer them a rate. 

This is because it gives these customers the opportunity to borrow, where they may not have been able to borrow at all. 

In other words, while you may face hefty rates on a car loan if you have an unhealthy credit rating, it might be your only option ... and at least the option is there. But in this case, you should still assess whether you can actually afford the high rate and are able to repay the loan, rather than spiral into more debt. 

It’s also important to bear in mind that keeping your credit score healthy or rebuilding it should be your top priority. So if you don’t really need to upgrade your car and can avoid taking out the loan for now, it may be worth the wait.  

What car loan options are out there right now? 

Well, no matter whether you have a healthy credit score or not, here are some car loans with tiered interest rates that you may want to check out…

Compare Car Loans

Wisr Secured Car Loan
  • Fixed rates from 4.74% (4.75% comparison rate*)
  • Tiered rates based on credit rating
  • Flexible repayment options

Looking for a loan that comes with a competitively low rate for customers with excellent credit? Wisr might be what you need! This loan comes with rates that start at 4.74% (4.75% comparison rate*) based on a customer’s credit rating. Wisr also offers borrowers the choice of weekly, fortnightly or monthly repayments, as well as the option to make extra repayments too, but no redraws are allowed. Even customers with an less healthy credit loan may be eligible for this loan, just bear in mind interest rates go up to 16.01% (16.03% comparison rate*).

Plenti Car Loan
  • Fixed rates from 4.89% (5.44% comparison rate*)
  • Tiered rates based on credit rating
  • Extra repayments allowed

If you need a car loan that has some low rates on offer, you may want to consider online lender Plenti. With a Plenti Car Loan, fixed rates are calculated in relation to customers’ credit rating and start at a competitive 4.89% (5.44% comparison rate*) for those with a healthy credit score. But if your credit isn’t excellent, you can still apply - just remember, fixed rates go up to 8.89% (9.46% comparison rate*). While customers can only make monthly regular repayments on this loan, there is the option to make free extra repayments. Bear in mind, no redraws are allowed on this loan.

SocietyOne Car Loan
  • Fixed rate from 6.39% (6.39% comparison rate*)
  • Tiered rates based on credit rating
  • Flexible repayment options

The SocietyOne Car Loan could be worth considering if you need a loan that offers up a range of rates based on your credit rating. Fixed rates start at 6.39% (6.39% comparison rate*) for those with a healthy credit history and goes up to 17.49% (21.0% comparison rate*). Plus, customers can choose either a fortnightly or monthly repayment schedule and make additional contributions whenever it suits at no extra cost. No redraws are allowed on this loan though, so remember once you make an extra repayment you cannot access it again.

Tips for keeping your credit score healthy 

If you don’t currently have a great credit rating, or you want to keep yours in tip top shape, here are a few handy ways to boost or maintain your credit worthiness. 

  • Pay on time: From your credit card, loans and even to your electricity and internet bills, make sure you are paying what you need to when (or before) its due. 
  • Don’t apply for multiple credit products at once: It’s not a good idea to apply for a number of loans or credit cards at one time. Rather than giving yourself the best chance to be approved, this will actually look bad on your credit history. 
  • Keep it stable if you can: If possible, try to avoid jumping around when it comes to your job and where you live - lenders think favourably of stability. 
  • Make sure the info on your credit history is correct: The truth is, sometimes credit reporting agencies get things wrong so the score you have on your report may not be accurate. Don’t be afraid to let these companies know if you find a mistake - it could be costing you better rates! 

Want to find out more about your car loan options? Head to our car loan comparison page for more lenders, handy guides and all the latest news!

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