People who are currently receiving Centrelink benefits or payments may be wondering whether or not they can get a car loan on Centrelink. Well, this depends entirely on what you’re receiving and if it is your sole income. Many lenders may refuse a car loan for those on Centrelink payments.
However, using the right lender can increase your chance of approval greatly. A lender will be able to determine if you are able to pay back a loan without getting into financial trouble. If you are currently on Centrelink and wondering if you can get a car loan, keep reading!
Centrelink Payments May Qualify as Income
One of the major eligibility criteria for any loan product on the market is having a regular income. Whether it be a car loan, mortgage, or personal loan, it is essential. Some lenders may view Centrelink payments as income while others won’t.
For example, Youth Allowance and JobSeeker are not often viewed as income. This is because they are temporary assistance programs. Once you move into the workforce or find a job, you will no longer be eligible for these payments.
Other payments may receive regular fixed payments and be seen as regular income. These payments include:
- Veteran’s Payments
- The Age Pension
- Carer’s Payments
- Family Tac Benefits
- National Disability Insurance Scheme (NDIS)
- Rent assistance
If you can get over the income hurdle, some lenders will approve you based on your credit history. If you have low debts, a good credit history, and a good financial standing, this will help you.
A Guarantor Can Help You Get a Car Loan on Centrelink Payments
If you are currently finding it difficult to take out a car loan on Centrelink, you may increase your chances by finding a guarantor. A guarantor is someone who has a decent financial standing and credit history that essentially guarantees the loan.
However, this means that they will be responsible for the loan should you be unable to pay it back. A guarantor will be legally bound to pay off the loans. If they cannot do this, they will suffer any effects of defaults.
It means that it can be recorded on their credit history. Anyone over the age of 18 that is an Australian citizen can become your guarantor. However, you will need to tell them what they are responsible for.
Having a guarantor can even give you a more competitive interest rate. You may also be entitled to borrow more money.
Other Options for Getting a Car Loan on Centrelink
There are some alternatives available to help you out. One of these includes getting an advance from Centrelink. However, these are usually only small amounts and may only cover emergency expenses.
Age pensioners are also able to apply for a loan. This requires them to own or have some sort of equity in a real estate asset. However, it may be affected by mortgage, reverse mortgage, or any outstanding liabilities on the property. Interest rates are also fixed at 5.25% per annum.
They are subject to a maximum loan amount. This will be paid in instalments instead of a lump sum. This is a great option when trying to get a car loan on Centrelink.
Centrelink Doesn’t Always Mean Bad Credit
If you are currently receiving Centrelink payments, it doesn’t necessarily mean that you have bad credit. However, there are still bad credit car loans available for those with low credit scores. If you are receiving Centrelink payments or pensions, try not to use your credit card often.
When you do, make sure you pay the balance back within the interest-free period. You should also ensure that you do not have many other outstanding loans. If you have a good financial standing, this could be a sign that your score could be above average.
The myth that your credit history stops lenders from approving a car loan is wrong. In fact, it is more likely that you don’t clear the hurdle requirement of income. Most of the time, it has little to do with your creditworthiness.
Responsible lenders will look at your entire financial situation.
The Bottom Line
When trying to get a car loan on Centrelink, it is important to know the ins and outs. Some lenders will accept your loan application while others may turn their nose up. It is important to know where you stand and what rights you have.
If you are currently receiving payments and are not sure where to go next, then hopefully the information in this blog can guide you to take the next step. If you are looking to get a car loan on Centrelink, consider speaking to the professionals at Online Personal Loans.
We are dedicated to helping you find the best financial solution. Better yet, we are experienced in helping those on Centrelink secure a loan.