The Rusty-collared Seedeater is distributed in Bolivia, central and southern Brazil, Paraguay, Uruguay and north-central Argentina. See the distribution map at xeno-canto. It is found in grass and bushes around marshland and is rarely seen on the ground.

In the south of Brazil, as in these photos. the subspecies encountered is S. c. melanocephala which is brighter and more tawny than the nominate found further north.