Posted on: 29 July 2015
If you currently receive Centrelink payments, you will know it can be a challenge to get car loans with no other payments. However, a car can be important, especially if you are trying to re-enter the workforce or need to balance caring for family members with attending medical appointments. Here are some of your options.
While many banks are reluctant to lend to people who only receive Centrelink payments, dealers are often able to structure a car loan around these payments. Indeed, the regularity of Centrelink payments can be a seen as a benefit to some dealers, versus the uncertainty of casual workers wages from private employers. Be sure to bring in proof of your current entitlements when looking for a car, as the dealer will often want to see the payments you receive alongside any savings you may have been able to put towards a car deposit.
While dealer finance has traditionally been at a higher interest rate than the banks, many dealers now offer relatively competitive interest rate packages to draw in new buyers.
Pensions loan scheme
If you are receiving an old age pension, you can receive an amount for a loan secured against your home or other real estate. This loan can be used for any purpose, including a new vehicle, and is offered through the Department of Human Services at a competitively low rate. This can be a great option if you have significant equity in your home but are cash poor.
Private non-bank lenders
There are a range of non-bank private lenders who will lend unsecured amounts for people who struggle to access traditional finance or cannot access money from the options above for their new car. The interest rates or balloon payments on these loans can be relatively high, so be sure to have a clear idea of how much money you can afford to pay for a car each week based on your budget, and understand if there will be any final payments. Remember you also need to leave enough money in the budget for petrol, registration and other ongoing costs such as car servicing. It is better to buy a slightly more affordable car to be able to afford any unexpected bills, rather than being caught short.
There are several options open for Centrelink payment recipients to access a car loan. Be sure to compare products, including regular and one off payments and loan duration, to determine the best product for you.Share