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.

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.

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.