Getting A Car Loan: On Centrelink Or As A Pensioner – Made Easy!
OK, you can stop looking. This is the guide you need to read if you’re on Centrelink or are a pensioner and need a car loan.
Remember – it might be slightly more difficult to get a loan on a pension or Centrelink payments, but it’s definitely NOT impossible!
Am I even able to apply for a loan on Centrelink or as a pensioner?
OF COURSE! We get asked this question all of the time. You actually don’t need to be working when you decide to apply. But the truth is – you 100% need some form of income.
So, this can be anything that brings some amount of money in which you can use to cover the repayments on your loan. This might be something like a disability pension, unemployment pension, age pension, parenting payment, or some other kind of eligible Centrelink payment (there are many, check below). Or it might be interest from assets or investments that generate a regular return.
Being in this class of income earners does limit your options to some degree. Some financial institutions, like banks and credit unions, might be reluctant to offer you a loan because thy might not be sure you can make the repayments. This translates to a level of risk that they choose not to work with. But don’t worry – there are still plenty of car loans for pensioners out there!
The good news is that while the basics legal requirements are the same each lender has different eligibility criteria. This means you have to be selective with your choice of lender to find one that matches your kind of loan application. Make sure they are used to working with applicants who are Centrelink/pension recipients.
Or why not save yourself some time and effort by applying to a finance broker like Hoolu – we match our customers with the best option for their unique situation from over 35+ different lenders!
How to get a bad credit car loan as a pensioner or on Centrelink payments?
The basic requirement for any loan is that you are able to meet the repayments on time and reliably. This is worked out by comparing the cost of the loan, which includes all interest and fees, in comparison to your income.
Lenders can’t legally dish out loans just because they feel like it. You need to be able to afford the loan and still have money left over to live without hardship. If you don’t feel like the lender/s you’re working with has your best interests at heart then look elsewhere!
With the idea that you need to be able to afford your repayments in mind you can then begin to budget for what you’ll be able to borrow. You’ll most likely have success when applying for a smaller amount that is within your borrowing range. This can also give you an idea on what cars fit into your price bracket.
Consider that you might be able to get a better quality used car rather than a cheaper new car. You might even be able to put any savings you have towards the car and only borrow the remaining amount. Both of these options will save you money. We actually spoke about ways to make your loan cheaper in this article – HOW TO: Get Cheap Car Finance With Bad Credit
If you go for the above option of savings and a loan to make up the difference you might find a personal loan is a good option. This might be the case as some lenders enforce high minimums on car loans, meaning you have to borrow more than what the car costs to buy. This means the loan costs more than it has to. Most car loans are generally secured – so you run the risk of losing your asset if you can’t make your repayments, meaning it might not be worthwhile for you.
If you need some help on understanding secured and unsecured car loans then visit the links below to read our last articles.
SO what are the basic lending criteria for a bad credit car loan?
Every situation is different. So is every applicant. But many lenders have similar criteria for granting loans in Australia. They are as follows –
– Applicant must be at least 18 years of age.
– Depending on the value of the loan you’ve applied for, you’ll need to have at least $400 per week of income so you can afford the repayments. This can include employment, Centrelink or pension payments.
– Be able to show payments are made into your bank account.
– You must be a resident of Australia (citizenship not required).
Some lenders will only lend to certain pension or Centrelink payments recipients due to preference or legislation. This list is a good start, but your mileage may vary:
– Carers Payments
– Total and Permanent Incapacitated Pension
– Disability Support Pension
– Single Parent Payments
– Aged Pension
– Veterans Affairs Pension
– Partnered Parent Payment
– Centrelink Pensions (not all are covered, please ask if unsure)
Top tips to keep in mind for any pensioner car loan:
– Should you go for a secured or unsecured loan? Remember that you may get a better deal overall with a secured loan. Lower interest rates can be had with a secured loan but you might find an unsecured loan suits your circumstances better. Particularly if you think you might fall behind on payments or you only need to borrow a smaller amount.
You might be able to find better rates with a secured loan, but an unsecured loan might be less hazardous if your circumstances change and you fall behind on payments. Unsecured loans are generally harder to get and are considered a short term loan, so the interest rates and fees generally reflect this as there is less room for the lender to make a return with interest costs. They are sometimes solely thought of as fast cash loans or payday loans, but this is not always the case.
– Choose between a variable interest rate or a fixed interest rate. Knowing what your interest rates will be over time can mean your repayments and costs for the loan will be predictable. Depending on the initial rate, a variable rate may increase or decrease, so be prepared for this possibility. It might cost you less but may also cost you more. So as a pension or Centrelink payment recipient who’s income stays relatively the same over time you might find a fixed rate is a safer choice because of the predictability.
– Get the best interest rate possible! While a lower interest rate will generally cost you less over the life of the loan, make sure you consider all costs on top. Don’t be fooled by a low interest rate bundled with extra costs or fees that diminish the benefit of the low interest rate.
– Don’t forget all costs – include any initial fees and charges if they apply. Not all lenders or finance brokers charge application fees. If you don’t want to pay for your application then don’t feel like you have to. For example, at Hoolu we don’t charge you for your application to be processed and we think that’s the way it should be! Try it out – Apply for free today with our 100% online loan application.
– Consider your loan amount relative to your income. Certain lenders or finance brokers will impose lower borrowing limits due to your finances. On top of this certain loan types or packages will only let you borrow so much, so be sure consider this when applying. Ask us if you’re not sure – visit our Contact Page
– When will you finish paying off the loan? – Combine your interest rate, your income, and the loan term and think about how long that actually is. Then figure out whether you can pay it back sooner rather than later to save yourself interest, whether its by making larger payments more frequently or lots of smaller ones. However you have to do it, paying your loan back faster saves you money. BUT be careful that there are no hidden fees for paying out your loan early.
– Remember, if you’re not sure about anything just ask! Your loan provider is obligated to explain everything to you BEFORE you accept the loan offer and terms. So ask them to inform you about your interest rate, repayments, fees, costs, penalty fees, and anything else you need to know. They should also issue you documentation with this information for your reference.
What if I have a bad credit score or questionable credit history?
We get asked this all the time – the same types of lenders who work with car loans for pensioner finance will generally be willing to work with people who have bad credit. It’s not really a big deal – lots of people run into financial trouble over time.
In fact many lenders offer credit products that are specifically for pensioners with bad credit history. So, once again check before you apply for a product or alternatively ask an expert finance broker from somewhere like Hoolu!
There’s a reason why our customers love us – we make their borrowing experience easy!
Applying for a secured bad credit car loan can take a lot of time and be stressful. We can share our expertise with you by making the entire process as simple and painless as possible. After all – we are THE MASTERS of bad credit car finance in Australia. Yep, nobody is better. It’s true.
Hoolu is happy to work with you to get your bad credit loan approved! Get in touch with us today – click here to visit our contact page. Or fill out the form below!
Check out our last article to learn how to get approved for a secured loan with a low credit score!
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