Can you get asset finance with bad credit?

I get this question more often than people think.

So let me start with the answer, plainly: yes, you can get asset finance with bad credit. It happens all the time.

But it depends on why your credit looks the way it does, and you'll get further being straight with us from the start than trying to hide it.

What does "bad credit" actually mean to a lender?

Lenders aren't looking for perfection. They're looking for the story behind the file.

A default, a judgment, an old tax debt, or some late payments all read differently to an assessor. And also the specific assessors all have their own judgement.

What they want to know is whether the problems are in the past and whether you're meeting your obligations now. A business that hit a rough patch three years ago and has traded clean since is a very different file from one that's still going backwards.

This is also where honesty pays. If you come to us and tell us up front, we'll do a soft credit check that won't touch your score, so we all know exactly where you stand before anyone makes a decision.

Does it matter why I have bad credit?

Yes, and this is the part most articles skip.

Bad credit for fair reasons is one thing. A business that failed through no fault of its own, a divorce, a health setback, a tenant that didn't pay, COVID, etc. If you've got every intention of repaying and the business is in a good position or clearly recovering, we can usually find a lender who'll look at it.

Bad credit because you didn't pay your last car loan is different. If that's the story, we'll probably tell you we're not a fit. It's not about judging you. It's that we have relationships with our lenders that we need to keep in good standing, and we won't risk those on a deal that looks like it'll go the same way.

If you're a sinking ship, we won't fund you. Simple.

That's us being honest with you and protecting the lenders who trust us to bring them good deals. We’re also protecting you from doing more damage to your own situation.

What changes when you have bad credit?

A few things, and none of them should surprise you.

First, the lender. You're more likely to be placed with a specialist non-bank lender than a big four bank, because they're set up to read a file rather than auto-decline it.

Second, the terms. They may be less favourable than what a clean file gets. We can't promise a specific rate, because your rate depends on the asset, its age, your financials and your credit profile. What we can promise is that we'll structure the application to give it the best chance.

Third, the security. A lender might want a larger deposit or a cleaner asset to offset the risk. It's not unusual. And leaving a deposit is worth doing anyway, because lenders like it and it means they're less likely to dig deep into your file.

What about ATO tax debt?

A tax debt can be an issue, but it's not usually fatal. Many Aussie businesses have an ATO tax debt.

Some lenders will disregard an ATO debt entirely as long as you're on a payment plan and keeping it up. Others will want to see the arrangement in writing. The key is being able to show it's under control, not hidden.

If you've got a tax debt, say so early. It's far better we find a lender who's comfortable with a managed payment plan than have it surface later and stall a deal.

What should I do before I apply?

1. Be honest with us about your file. We can't place what we can't see.
2. Get any payment plans, including the ATO, formalised and current.
3. Leave a deposit even if it’s small. Lenders look more favourably on a file with skin in the game.
4. Don't spray applications around. Some lenders will knock you back if they see multiple inquiries in a short window, so we're careful about which lender we approach first.

Can a business with bad credit turn it around?

Yes, and I've watched it happen.

We've helped businesses with bad credit get funded, watched the business improve, and then gone on to sign more deals for them as they grew. That's been everything from truck finance to equipment finance, and the first one is always the hardest. Once you've got a clean repayment history on a new asset, the next application is easier, and the one after that easier again. That's the part of the story people don't hear: bad credit finance is a bridge, not a dead end.

Where to from here

If you've been putting off asking because of your credit, don't. Tell us what happened, and we'll tell you honestly whether there's a deal here. If there is, we'll find the right lender for it. If there isn't, we'll say so instead of stringing you along.

General information only. This article provides general information and does not take into account your objectives, financial situation, or needs. Stacked Finance Pty Ltd is a credit repr under Viking Asset Aggregation and provides commercial finance services only. Consider whether the information is appropriate for your circumstances and seek advice from your accountant or financial adviser before acting.