Defaults, late payments, low credit scores — they don't lock you out of equipment finance. Specialist lenders assess the full picture: your current income, business viability, and the equipment's value. A broker finds the right one.
When your credit is impaired, specialist lenders focus on these factors:
The severity and age of the credit issues. A single paid default from two years ago is very different from multiple unpaid defaults and a current court judgment. Older, paid credit issues are easier to work around. Recent, unpaid issues are harder — but not always impossible.
Your current income and business performance. A strong current income with clean recent bank statements can offset past credit problems. If your BAS shows consistent revenue and your bank statements show no dishonours or overdrafts in the past 3–6 months, that tells a positive story regardless of what happened two or three years ago.
The equipment as security. This is why equipment finance is often more accessible than other forms of borrowing when credit is impaired. The lender has a tangible asset — the equipment — that they can recover and sell if you default. Higher-value equipment from well-known brands with strong resale markets improves your position.
A deposit. For bad credit applications, a deposit of 10–20% (sometimes more) is usually expected. The deposit reduces the lender's exposure and demonstrates your financial commitment. Even $5,000–$10,000 on a $50,000 piece of equipment can change the outcome from decline to approval.
| Credit profile | Rate range (chattel mortgage, secured) |
|---|---|
| Minor credit marks (paid defaults older than 2 years, credit score 450–550) | 10.0% – 13.0% p.a. |
| Moderate credit issues (recent defaults, multiple marks, score 350–450) | 12.0% – 15.0% p.a. |
| Serious adverse (bankruptcy discharged, Part IX, multiple unpaid defaults) | 14.0% – 18%+ p.a. |
Rates current as of June 2026. Individual circumstances vary. Subject to lender criteria and approval.
These rates are higher than clean-credit rates, but they're temporary. Many borrowers refinance to a significantly lower rate after 12–24 months of clean repayment history on the new equipment finance. A clean repayment record on a secured asset is one of the fastest ways to rebuild your credit profile. See full rate breakdown.
This is the one situation where going direct to a lender is almost always the wrong approach. Here's why:
Banks will decline you and generate hard enquiries. Major banks have automated credit scoring systems. If your score falls below their threshold, you're declined automatically — and the hard credit enquiry goes on your file, making subsequent applications harder.
Multiple rejections compound the damage. If you apply with three lenders and get declined by all three, that's three hard enquiries on your file within a short period. Each subsequent lender sees those enquiries and assumes you've been rejected repeatedly — making them more cautious, not less.
A broker pre-assesses without a credit check. A broker reviews your credit report, income, and situation first — before any formal application or hard enquiry. The broker then identifies the specific lender most likely to approve your application and submits once, to the right lender, with a complete file. One enquiry. One approval. See how broker pre-assessment protects your credit score.
A broker knows which lenders specialise in what. Not all specialist lenders assess bad credit the same way. Some are comfortable with paid defaults but won't touch unpaid ones. Others will consider recent issues if the deposit is large enough. A broker matches your specific credit profile to the specific lender who's most likely to say yes. See how bad credit finance works for car loans.
1. Check your credit report. Under the Privacy Act 1988, you're entitled to a free credit report every three months from each of the three bureaus (Equifax, Experian, illion). Check all three — errors are more common than people think, and disputing an incorrect default can improve your position.
2. Pay out small defaults if possible. The difference between a paid default and an unpaid default is significant. A $500 paid utility default is far easier to work around than a $500 unpaid one. If you can clear small unpaid defaults before applying, do so.
3. Get your bank statements clean. Lenders will review your last 90 days. No dishonours, no overdrafts, consistent income deposits, manageable spending. Three months of clean bank statements demonstrates your current financial position is stronger than your credit file suggests.
4. Have a deposit ready. The bigger your deposit, the wider your options. For bad credit equipment finance, 10–20% is a common starting point. On a $100,000 machine, that's $10,000–$20,000.
5. Talk to a broker before applying anywhere. Don't apply direct. Don't go to your bank. Don't fill in online forms. One pre-assessment with a broker, one matched application.
B.S., Ipswich, QLD. Civil contractor, 6 years trading. Two paid defaults from 2023 — a supplier account ($3,200) and a credit card ($5,800) that fell behind during a slow period. Credit score 420. Both defaults paid in full 18 months ago. His bank declined equipment finance for a used Komatsu PC130 excavator ($145,000). We reviewed his file: both defaults paid, 18 months of clean bank statements showing strong revenue, existing truck finance with a perfect repayment record. Matched him to a specialist lender who approved at 11.8% p.a. chattel mortgage with a 15% deposit. Twelve months later, with a clean payment record on the new finance, he refinanced to 8.4% — saving approximately $8,000 in interest over the remaining term. Individual circumstances vary.
Yes, after discharge (typically three years from the date of bankruptcy in Australia). Some specialist lenders will consider applications during the bankruptcy period in specific circumstances — for example, with a large deposit and evidence that the equipment is essential for income generation. After discharge, lender options open up progressively, and rates improve.
Yes. Credit-impaired borrowers pay higher rates — typically 12–15%+ p.a. compared to 5.5–10% for clean credit profiles. The premium reflects the higher risk the lender is taking. The good news: rates aren't permanent. Refinancing after 12–24 months of clean repayments can significantly reduce your rate.
In most cases, yes. The deposit reduces the lender's risk exposure on a higher-risk application. Typical requirements are 10–20% of the equipment's value, though this varies by lender and severity of credit issues. Some specialist lenders offer lower deposit options for minor credit marks with strong current income.
Specialist lenders typically take 2–5 business days for credit-impaired applications because the assessment involves more manual review than an automated clean-credit decision. In some cases, we've achieved same-day or next-day approvals for straightforward applications with paid defaults and strong current financials.
Yes. New equipment from major brands is actually easier to finance with bad credit than used equipment — because the lender has stronger security (a new asset with maximum resale value). The rate will be higher than a clean-credit applicant would pay, but approval is more likely than for older or niche equipment.
Bad credit makes the path narrower — but it doesn't close it. The right lender, matched by a broker who understands the specialist market, can get you the equipment your business needs to operate and grow.
No cost, no obligation, no credit check to get started. We'll review your file and tell you what's possible.
This article provides general information only and does not constitute financial advice. All finance applications are subject to lender criteria and approval. Rates mentioned are indicative and current as of June 2026 — individual circumstances vary. Novara Finance Pty Ltd | AFSL 517192 | ABN 99 687 789 144.