Can I get a car loan on Centrelink payments?
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
Getting approved for Centrelink car finance
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.