Why can I get a $50,000 car loan when I can’t get a $10,000 personal loan?

Customers often ask us why they can access a $50,000 car loan when they have had trouble getting a $10,000 personal loan. This week, Walshy breaks it down.

Welcome to Whiteboard Wednesday.  I’m Paul Walshe, founder and CEO of Fair Go Finance.So, today’s topic is a question we get asked from our customers frequently and that is, “Why can I access up to $50,000 on a car loan but not $10,000 on a personal loan?”

Your credit profile may be impaired

The difference in access to credit is really governed by your credit history and the way the lender sees the level of risk around you as a borrower. So, in the case where you can’t or you’ve been declined on an application for a loan up to $10,000 it may indicate your credit history in the past has taken a knock or there’s something on your application that the lender doesn’t like the look of and it raises a red flag.

In either case that lender typically is going to see you as being credit impaired or having bad credit.

Access to collateral can help

So how do you access a larger amount with bad credit?

It’s typically by offsetting the risk that the lender sees around you as a borrower and that is done through the use of security on the loan.  Now, in residential mortgages that’s the house but in car loans and personal loans it’s the car. So if you would go into default as a borrower on the loan, the lender would repossess the car typically and sell that car reducing the balance that you owe to the lender.  By having that recourse, the borrower can access more money and the lender feels more comfortable advancing larger loan amounts to a borrower. So, it also provides a benefit to the borrower, ie. to you as a customer, of reducing that interest rate cost on your loan.

What options do I have?

Some of the options you have, if you have bad credit and you are looking for a larger loan, are to either take a car loan which is secured if your purpose is to buy the car or to use your existing car as security on a future loan.  That may increase your access to credit but also reduce costs that you pay for that credit.

Hopefully you found this useful for more information like this follow us on Twitter or subscribe to our YouTube channel.

Thanks very much.


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Are you eligible to apply?


It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.

Check your options before you borrow:
For more information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.

Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan.
If you are on government benefits, ask if you can receive an advance from Centrelink.

The Australian Government’s MoneySmart Website shows you how small amount loans work and suggests other options that may help you.

* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.