Applying for a Car Loan with 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’ you’ll be more likely to be approved for a car loan on Centrelink. This can be from part-time work or superannuation payments.
Which types of Centrelink payments are considered?
The type of government benefit you receive will determine if it 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 this 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 a regular income stream. These could be income form sources such as employment to apply for your car loan.
Can you afford Centrelink car finance?
To qualify for a car loan on Centrelink payments, is to demonstrate your capacity to make repayments. This is the primary hurdle that you need to cross in order to get car loan approval.
To do this, give yourself enough time to save the amount you want to spend on the car loan. A period of three months is recommended to get this done.
This will show you have the income to support car loan payments. And it will also give you a extra amount to cover costs once you buy the car. These includes 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. 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. She is looking to get 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. This will help her 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 will use 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. Her father 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.
Consider asking a parent or family member to be a 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?
There are some issues that lenders have with accepting a car loan on Centrelink. One of them 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. This means that if they can’t show that you can afford the loan, then they legally cannot give you a car loan. Of course, all decisions are based on your income and bank statements.
Do you have a supplementary income?
Working part-time will help your Centrelink car finance application. Even if it is just one or two days a week. 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, speak to a car loan broker. This 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.