Yes, you may be eligible to apply for a car loan if you receive Centrelink payments. Centrelink benefits come in many forms, and lenders may consider several of them in assessing your eligibility to apply for a car loan.

Regular government and Centrelink payments that may be considered when assessing your suitability for a car loan include:

• Parenting Payment;
• Family Tax Benefit;
• Age Pension;
• Disability Pension; and
• Carer’s Pension.

Each of these Centrelink payments can be regular and long-term. Many lenders may view them as an income source for the purposes of a loan application. Make sure to check out your own Centrelink details to be certain you know what type of payments you are receiving, or are eligible to receive, before applying for a car loan.

What Centrelink payments won’t lenders consider as income when applying for a car loan?

While many types of Centrelink payments may be considered a regular source of income when applying for a car loan, JobSeeker and Youth Allowance payments can be a little more complicated. Both of these types of payments are considered to be temporary assistance programs and technically a form of unemployment benefit, so lenders may not regard them as a source of regular income. With that being said, if you receive additional income on top of these Centrelink payments, such as regular Family Tax Benefits, you may be eligible to apply for a car loan whilst receiving Centrelink benefits — it really comes down to your personal circumstances and whether you are able to meet the minimum income requirements and normal lending criteria.

Applying for a car loan while receiving Centrelink payments

When applying for a car loan while receiving regular Centrelink benefits, there are some extra steps you may be able to take to help ensure you can afford the car finance (and to hopefully help get your application over the line!).

Find the right lender

Finding a lender that is willing to consider regular Centrelink payments as a source of income can be an essential piece of the puzzle. A good lender should be flexible and willing to discuss your options with you to work out the best deal for you. Make sure you take your time talking to a lender to help find the right option for your circumstances.

Know your budget

Speaking to a lender about conditional pre-approval for finance can give you a good idea of how much money you may be able to apply to borrow. With a realistic budget and dollar figure in mind, you should be able to find the perfect car and car finance for your needs (and your back pocket!).

A lender is legally prohibited from providing you with a car loan that you cannot afford to repay, so if you’ve been given pre-approval for car finance, the repayments should fit nicely into your budget — even if regular Centrelink benefits are your only source of income.

Using a car loan calculator can help with working out what repayments you are able to afford on your chosen loan amount, should you be approved. This can be essential for Centrelink payment recipients to ensure they’ve allowed enough of a buffer to still afford the essentials and the occasional treat.

Apply for the right type of finance

When deciding between a car loan and a personal loan, your unique situation and needs will likely dictate what you are eligible to apply for, and the best option for you. If you’re looking to purchase a car and use additional funds to make vehicle modifications, a personal loan may be more appropriate, if you are eligible to apply. This may be because the amount financed under a car loan is based only on the car’s purchase price and does not cover additional expenses that you may incur in the future (like new roof racks or some rims).

If you are eligible for one, a personal loan can be taken out for a lump sum, which can help cover the vehicle’s costs and the modifications you’re planning to make. Keep in mind that personal loans can be more expensive than car loans, so you’ll need to be clear on what components of your purchase you need funds for (e.g. just the car, or the car plus upgrades) and then weigh up the pros and cons. You will also need to check what you are eligible to apply for, when it comes to car loans and personal loans.

Clean up your finances

If you’ve got some time to spare, it might be useful to clean up your spending habits. While not absolutely necessary, it may help your case if you take a break from gambling and stick to a budget to show that you can manage your money well.

Car loans with Centrelink benefits vs car loans for bad credit

People receiving Centrelink payments may be relieved to learn that receiving regular Centrelink benefits doesn’t impact your credit score. However, it can be harder to get a car loan with some lenders if your main income source is government benefits (just like how it can be harder to get a car loan with some lenders if your credit score is bad).

The major components lenders look at when deciding whether to lend you money are:

• your credit history and how likely you are to repay the credit; and
• your regular source of income, and whether you can afford to repay the credit.

People receiving regular Centrelink payments may struggle to convince some lenders that they can afford their repayments. Similarly, people with a bad credit history might find it difficult to prove to some lenders that they are likely to make their repayments in accordance with their loan agreement. But that doesn’t mean it’s the end of the line for these applicants.

Frequently asked questions about Centrelink car loans

Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.

Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.