Definitive Guide to Car Finance for Bad Credit

Most of us cannot live without a car in South Africa — travelling for work, errands, and family trips become so much easier and more comfortable. Having reliable transportation improves your life quality. If you have some bad record with your creditors, you might feel like it would be impossible to find car finance. Swift Banker understands and explains how to buy a car with bad credit so you can drive away in the car of your dreams.

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R 2100.19
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R 26011.17
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*Representative example: Estimated repayments of a loan of R30,000 over 36 months at a maximum interest rate including fees of 27,5% APR would be R1,232.82 per month. Swift Banker is an online loan broker and not a lender. Our service is free, and we work with NCR licensed lenders in South Africa. Interest rates charged by lenders can start as low as 20% APR, including an initiation and service fee determined by the lender. The interest rate offered depends on the applicants' credit score and other factors at the lender's discretion.

Loan amount R100 - R250,000. Repayment terms can range from 3 - 72 months. Minimum APR is 5% and maximum APR is 60%.

Understanding Credit Records

Credit records are a significant factor in determining if you can access other financial products, such as car finance. Your credit record is a history of your creditworthiness and tracks what and how you have borrowed. A credit record will provide information on your past loans, credit cards, repayments, defaults or any legal action taken against you.

What is Bad Credit?

Bad credit – or poor credit – is when your credit record shows that you have had problems paying things on time, missed or defaulted on payments, and have large amounts of debt. Lenders don’t like this and often refuse car finance to those with bad credit records. They may see you as a high-risk borrower. A basic understanding of your credit record and some basic steps to improve it will go a long way towards guaranteeing car finance.

The Lowest Acceptable Credit Score to Qualify for Car Finance

South Africa’s credit scores are calculated on a scale between 300 and 850, with 850 being the most creditworthy. Car finance has no minimum credit score, but anything under about 580 is considered ‘bad credit’. Different lenders have different criteria, and some might be prepared to look past a relatively poor score.

Bad credit? No problem. If your credit score is low, you shouldn’t despair. There are lenders out there, specifically set up for car finance bad credit, that look at what is called ‘affordability’–your income, length of employment and ability to make a deposit.

The Overview of Car Finance for Bad Credit

Applications for low credit score car finance can sometimes be a bit of a nightmare, but not always impossible. Here is a general overview of car finance for bad credit South Africa.

1. Higher Interest Rates

Borrowers with bad credit often face higher interest rates as lenders offset their increased risk. This means the overall cost of car finance might be higher than for someone with a good credit score. However, making timely payments and improving your credit score can help you refinance at a lower rate in the future.

2. Larger Down Payments

To reduce the risk for lenders, people with poor credit may need to provide a higher down payment. This large deposit would also decrease the loan amount and show commitment, a crucial factor in the South African market.

3. Limited Loan Options

Depending on your bad credit history, South African banks and financial institutions can be reluctant to provide car finance. It also depends on the type of car you are looking to buy and the cost. However, there are finance companies that specialize in this market. They are usually more accommodating and can tailor solutions to meet your needs.

4. Potential for Improvement

If you can afford the car, repaying a finance deal on time and as scheduled should eventually improve your credit record. The longer you make payments on time, the more your credit score should improve, and the better the terms under which you can finance your next car.

As elsewhere, the challenge in South Africa is real, but opportunities exist for financially prudent and committed would-be borrowers of vehicle financing for bad credit. The key is understanding the borrowing terms and finding lenders who can accommodate your situation.

Where to Get Vehicle Finance for Bad Credit

Obtaining car finance with bad credit involves exploring various lending options.

Conventional Banks and Lenders

While conventional banks have attractive interest rates, they deny credit to many individuals because they have high credit requirements. Poor credit applicants are either rejected or given a loan with unfavorable terms since conventional banks depend strongly on credit scores.

Credit Unions and Community Lenders

Credit unions and other community lenders are more likely to treat customers as people and care about their lives. These not-for-profit organizations consider things like an applicant’s work history and whether their pay cheque is reliable, which could make the difference between qualifying or not. They also have more flexibility to extend loan terms and charge interest rates to people with low credit scores.

Alternative Financing Platforms

Alternative financing solutions, including peer-to-peer lending, online lenders, and fintech companies, find new ways to evaluate creditworthiness beyond the scores and grant fast approvals and flexible terms to borrowers of car finance for low credit score. They use technology and data science to make credit more accessible.

Tips for Getting Bad Credit Car Finance

Improve Your Credit Score

This won’t happen overnight, but paying off existing debts, bill payments, or borrowing money can make a major difference in your loan application. Don’t take on new debts.

Shop Around

All the banks have different rules and require different details to process your loan. Therefore, don’t accept the first offer when you want to buy a car with bad credit. Shop around to get the best conditions and lowest interest rates.

Get a Co-Signer

A strong co-signer with good credit can mean the difference between approval and no approval or between good and bad terms.

Consider a Smaller Loan

Choosing a less expensive car will decrease the amount you need to borrow, making it much easier to get approved for a loan and lowering your instalments.

Alternative Solutions to Bad Credit Car Loans

When the traditional ways to finance a car don’t appear to be able to help, thinking outside the box can still get you into the ride of your choice:

  • Rent to Own Options: Rent to own car finance is perfect for those with bad credit. Rent a car with an option to purchase it when the lease ends. All monthly payments could cover the rent and the ownership cost, which would usually require a smaller deposit than traditional financing. 
  • Car Lease Options: The lower monthly payments occur because you pay for depreciation only. You drive newer, better models with fewer problems and never own them. At the end of the lease, return it, lease another one, or buy it.
  • Affordable Cars: If one decides on a cheaper car, the loan amount will be less, and possible monthly payments could be smaller, which would improve the chances of obtaining finance approval with bad credit. Such cars are also cheaper when it comes to insurance and maintenance.

Precautions to Take When Applying for Car Finance with Bad Credit

If you have applied for car finance with low credit score, there are some important points to consider so that you won’t get scammed and your experience goes as smoothly as possible.

1. Avoid Scams and Predatory Lenders

Keep an eye out for scammers who prey on people with bad credit, designing competitive finance terms that seem beneficial the first time around but don’t account for the excessive fees and interest rates that come with them. Research potential lenders of car loans for bad credit, check that they are licensed, and be wary of claims of guaranteed approval.

Common scams are bait and switch (changing terms at signing), yo-yo financing (claiming that your financing fell through after you have driven home) and loan packing (adding services that you didn’t request). Read any and all terms before you sign.

2. Read the Fine Print

The fine print on your loan agreement can save you thousands of dollars. Check for unexpected fees and charges, prepayment penalties, and unusual terms that could impact the total cost of your loan. Double-check your interest rate, fees, payment terms, and default terms.

Understand the true interest rate, payment schedule and consequences of missed payments. This way, you know what you are signing up for and can take steps to avoid predatory lenders.

Frequently Asked Questions (FAQs)

Sure it is. Several lenders will accept applications for car finance for low credit score in South Africa. However, the terms of the contract might not be as financially favorable to you.
Yes, a 500 score can get a loan, but not an easy one. Loans will come with much higher interest rates and tougher terms.
Bad credit vehicle finance is available from specialty lenders, credit unions or peer-to-peer lending networks (companies that match borrowers and lenders but don’t share their own money for lending).
There’s no real lowest credit score for a car loan, but 600 is generally regarded as poor and hard to get approved for. You may still get a car with bad credit at a higher interest rate from some lenders.
Bad credit loans in South Africa can have interest rates of 20 or 30 per cent or even more. It depends on what lender you are with and other financial elements.


While it’s not easy to get vehicle finance with low credit score in South Africa, there are things you can do to make it happen. Find out your credit score, look at loan options, and increase your credit rating so you can drive off in your car much sooner than you could ever imagine. Don’t just pick the first offer you see. Shop around, compare prices and read the contract carefully.

Got a car in mind? Swift Banker is with you all the way. Contact us now to discuss your car finance and make your next car yours.