Name: Low Income Car Loans
Creator: Savvy
Published: 2020-12-15T09:30:16+10:30

Earning a high income isn't necessary to qualify for car finance. Low income earners can get approved for car loans too. There are many lenders that specialise in helping low-income earners access the finance they need for their car. Lenders are likely to review your car finance application in more detail. Though, this is just to ensure you can be offered a loan that fits within your capacity.

You can apply for a low income car loan right here with Savvy. We're partnered with lenders who understand your situation and are ready to work with you.

I receive Centrelink benefits. Does this help?

Yes! Many lenders in the market will accept certain Centrelink benefits as a source of income. Here is a list of some of the allowable benefits:

Partnered Parenting Payment
Family Tax Benefits Part A and B
Disability Support Pension
Aged Pension
Veterans' Pension
Carers Payment

Payments such as JobSeeker and Youth Allowance, which are conditional on age (in the case of Youth Allowance) and employment, typically aren't considered stable income by lenders and won't be included in your total earnings as a result. However, each lender has its own requirements. Once you apply, you can ask if your Centrelink benefits qualify as income.

My partner has a stable income. Can they help me get a car loan?

Yes! It helps if your partner has a stable income. If your partner is contributing to your household expenses, it will give you more affordability for car finance. By providing evidence of your partner’s income (such as payslips or bank statements) when the lender calculates your living expenses, they'll consider splitting the household expenses. This will give you more disposable income, therefore potentially increasing your borrowing capacity and chances of approval.

Another option, if splitting doesn't meet your lender’s requirements, is to add your partner as a joint borrower. This means your combined income will be assessed at the approval stage. If the loan is granted, it’s important to note that the loan will be in both names, with both applicants being equally responsible for the debt.

What are the lender requirements for low income car loans?

Preparing for any loan can be confusing. There are many aspects a lender reviews before making a decision. Thankfully, we've made it simple to prepare for your car loan application. We've outlined what a lender will review when making an assessment:

Credit report

Your credit report will give you a credit score. In Australia, there are three credit reporting agencies, each of which has its own scale for grading credit scores. These are as follows:

Equifax
Below average	0 – 459
Average	460 – 660
Good	661 – 734
Very good	735 – 852
Excellent	853 – 1,200

Experian
Below average	0 – 549
Fair	550 – 624
Good	625 – 699
Very good	700 – 799
Excellent	800 – 1,000

illion
Zero	0
Low	1 – 299
Room for improvement	300 – 499
Good	500 – 699
Great	700 – 799
Excellent	800 – 1,000

Your credit score is based predominantly based on your credit history. However, there are many factors involved in producing a score. The below guideline outlines some of the factors that make up your credit score:

Positive factors	Negative factors
Low number of credit enquires	Numerous credit enquiries
No payday loans	Frequent changes to residential address
Good repayment history with other loans and debts	Defaults and bankruptcy
Low credit card limit	Credit infringements
Established credit history	New/short credit records

Bank statement conduct

If your bank statements show good conduct, it will help you secure a car loan. Your spending habits and lifestyle are generally reflected in your bank statements. If you always pay your bills on time, have no payday loans and do not excessively gamble, these will show good conduct on your bank statements. Don’t stress too much if you’ve missed one payment on an existing facility or overdrawn by a small amount, though: a small once-off oversight shouldn't cause too many issues.

Employment requirements

Each lender has different employment requirements. Some only require a minimum of one month working experience for full/part-time employers and three months for casual employees in their current job. For self-employed applicants, some lenders require to have ABN for at least six months or at least one full year's worth of financials.

How should I set my budget?

You can estimate your repayments by using our free online car loan repayment calculator. Many lenders provide loan terms from 12 to 84 months. We suggest you go through your living expenses and see how much you are prepared to pay for a car loan repayment. It is wise to have a budget in your mind before you go shopping for a car.

Tips for maximising your car loan approval chances

Apply for a smaller loan

The greater the loan sum, the greater the risk to your lender and the less likely you are to be approved. Opting for a cheaper car to finance, or not requesting a loan worth 100% of its purchase price, can help increase your likelihood of being approved.

Work towards improving your credit score

Your credit rating also plays a major role in determining both your approval chances and your interest rate. Applicants with poorer credit histories will attract higher interest rates to partially mitigate the risk their lender takes on. By paying off any outstanding debts and lowering the limits on your credit cards, you can increase your credit score.

Don’t apply for multiple loans at once

If your budget allows, making larger repayments for a shorter period will protect you from negative car loan equity. Longer car loan terms mean you're paying less of what you borrowed down each month.

Apply with your partner

If you happen to be living with a partner, adding their income to your application is a highly effective way to maximise your approval chances. This is because the level of risk is decreased by shifting the reliance from one income to two, easing the burden on you and leaving your loan with a contingency plan if one stream runs dry. This can also lower your interest rate and increase your borrowing power.