Can I get a car loan on Centrelink payments?

By Angela Monroe - January 16, 2018

How To Get Centrelink Car Finance

Some Centrelink income forms can be accepted as income towards a car loan. When you have a ‘supplementary income’ from part-time work or superannuation payments, you’ll be more likely to be approved for a car loan on Centrelink.

Which types of Centrelink payments are considered?

If you’re receiving part of your income as government benefits, the benefit type you receive will determine whether that income can be counted towards a car loan.

Centrelink payments that will be accepted by lenders include:

  • Age Pension
  • Carer’s Allowance
  • Disability Pension
  • Child Support Payments
  • Family Tax Benefits or Parenting Payments
  • Overseas Pension
  • Veteran’s Pension

With most of these income forms, you’ll need to show a supplementary form of income to support your application, as they won’t be sufficient to cover car loan payments on their own.

Youth Allowance, Austudy and Newstart aren’t accepted income forms to qualify for a car loan on Centrelink. If you receive one of these payments, you will need to wait until you have an income stream such as employment to apply for your car loan.

Can you afford Centrelink car finance?

The primary hurdle that you need to cross to qualify for a car loan on Centrelink payments is to demonstrate that you will be able to meet the car loan repayments.

To do this, give yourself a three month period where you save the amount that you want to spend on the car loan each fortnight.

This shows that you have the income to support car loan payments, but it will also give you a buffer once you buy the car with your Centrelink car finance for costs like registration, insurance and maintenance.

Case Study: Melanie gets a car loan on Centrelink
Income and Centrelink payments
Melanie is a part-time carer for her father, who is undergoing chemotherapy to treat leukaemia. She receives part of her income from a part-time role two mornings a week working at the local library, and the remainder from a Centrelink carer’s pension.Car trouble springs up
She’s currently driving an old Toyota Corolla, but it has a major oil leak which will be very expensive to fix. She can’t go without a car as public transport to get to her father’s appointments takes hours, and is exhausting for him.Finding a solution
Melanie speaks to a car loan broker at Loans for People With Bad Credit about her options for a small car loan to buy a used car. With her income from the library, her Carer’s Payment and her father’s Income Protection payment, they should be able to afford a loan together. Melanie decides to test this out first.

Saving a deposit
Melanie sets a task for herself to save $200 per fortnight towards buying a new car, to demonstrate that she and her father can afford a car loan. She does this for 10 weeks, saving $1,000.

Getting approved for Centrelink car finance
Now that Melanie has some savings and can show on her bank statements that she can afford the loan, she submits a joint car loan application with her father.

The car loan is approved for $7,000, and she uses this money to buy a reliable Mazda 2 that they will be able to use for the next 3-5 years.

Take out a car loan with someone else

In the example above, Melanie increases her likelihood of approval by taking out a joint car loan with her father, as he will be benefiting from owning the car too. With two incomes to rely on for the car loan payments, the lender is confident that Melanie will meet the repayments on time.

If you don’t have someone who can take out a joint car loan with you, consider asking a parent or family member to go guarantor for you by co-signing the car loan.

When you have a guarantor for your car loan on Centrelink, they are not responsible to make the regular repayments, but if you default on the loan they will be called on to cover the difference between the market value of the car and the remaining balance on your car loan.

Is your income secure?

One of the issues that lenders have with accepting a car loan on Centrelink is that your benefit can change if you no longer meet the criteria for the payment that you are on.

Changes in government policy can also affect your income.

Lenders are under an obligation under the National Consumer Credit Protection (NCCP) legislation to lend responsibly, which means that if they can’t show that you can afford the loan, based on your income and bank statements, then they legally cannot give you a car loan.

Do you have a supplementary income?

If you are working part-time, even if it is just one or two days a week, this will help your Centrelink car finance application. You can demonstrate your supplementary income using your tax returns, payslips, or bank statements.

You might also use invoices for work you’ve done, or items sold.

Ready to apply?

If you are ready to get more information about Centrelink car finance, speaking to a car loan broker will ensure that you’re directed to lenders who will consider your application for approval.

You can ask them what you need to be eligible for Centrelink car finance, and get your car loan application started.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.

Comments

Mary Campbell

April 4, 2018

I’m trying to apply for loan to get car because I have 3 kids and I was saving
Some money

Angela Monroe

April 4, 2018

Hi Mary, thanks for your comment. We can possibly help, depending on your exact situation. The best way to get an answer is to phone us on 1300 769 384, or to submit a quick quote form.

When you do this, you’ll get a call from a lending manager who will be able to talk with you about your situation and provide some car loan options.

Jorita Malay

May 2, 2018

I would like to a apply for a car loan under Centrelink income and I would like to give you the information a bout me
my name is Jorita maree Malay. DOB 17/04/1993
Add 7 panton st derby wa 6728 mobile number 0467871966

Angela Monroe

May 11, 2018

Hi Jorita, I’ve passed your information on to our lending staff. Someone will call you shortly. Thanks for your enquiry!

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