Looking for a car loan but earn a low income? There are still options available to you. Get a free, no-obligation quote with Savvy today!
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Earning a high income isn't necessary to qualify for car finance, with a wide range of diverse and flexible lenders leaving the door open to car loans for low income earners. Major banks often are more willing to work with higher-income earners and those with excellent credit records, but there are other lenders who can help applicants with lower income or bad credit.
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. Get started with a quick online quote and get the wheels in motion on your application before you know it!
Yes! Low income earners can get approved for car loans. There are many lenders that specialise in helping low-income earners access the finance they need for their car. They'll review your application in more detail and offer you a loan amount that fits within your capacity. Most low income earners are looking for an inexpensive vehicle used predominantly for necessary travel, such as to and from work, picking up the kids from school and the like. There are many lenders with packages to suit these requirements.
Preparing for a loan can be confusing, as there are many aspects a lender reviews before making a decision. We've outlined what a lender will review when making an assessment:
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 |
Source: What is an Average Interest Rate on a Car Loan? – Savvy. Information correct as of April 2024.
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 |
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.
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.
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:
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.
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.
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 a car loan. 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.
If you aren't in a hurry, saving up for a deposit for your car before you get a loan can be very beneficial. It not only reduces your loan amount and interest but also shows a strong ability to save. Although they can help you save in the long term, there are lenders who can offer loans of up to 100% of your car's value.
It's important to keep an eye on your spending habits as well. Live within your means. Try to pay all your bills on time and don't overdraw on your accounts too often. This is going to play a major role in getting a loan approved.
Lenders like stability, so it's important where possible to show that through your living situation and employment. Lenders dislike ongoing movement in an applicant's job or place of residence, so it's important to keep this in mind when preparing to make an application for a loan.
Some lenders may decline a car loan if the applicant has two payday loans at once, while some may not even accept one. It's a good idea to reduce your payday loan amounts or get as many of them paid out completely in order to get approved.
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Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
