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

Just because you’re on a low income doesn’t mean you can’t finance the new or used car you’re looking for. There are plenty of lenders out there who specialise in helping low income earners buy their next vehicle, which is where Savvy comes in. You can apply for a car loan with us today and have an expert walk you through the process from start to finish.

Do Centrelink benefits count towards my income?

There’s a wide range of Centrelink benefits that can be accepted as part of your income on your car loan application. Although they vary between lenders, these can include:

Age Pension
Carer Payment
Disability Support Pension
Family Tax Benefits A and B
JobSeeker Payment (in conjunction with wage income or family allowance payments only)
Parenting Payment
Service Pension for Veterans
Special Rate (Totally and Permanently Incapacitated) Pension

Essentially, what lenders look for is a stable, consistent and reliable payment. Each of the above payments fit this requirement with certain lenders. However, Centrelink payments that won’t be accepted include:

ABSTUDY
Austudy
JobSeeker Payment (on its own)
Youth Allowance

If you’re unsure about whether your Centrelink income can be counted towards your application, you can speak with your Savvy consultants about your available options.

What are the lender requirements for low income car loans?

Different lenders have different requirements when it comes to how they assess car loan applications. However, four of the main areas all lenders will look at are income, credit reports, bank statements and your employment. Let’s take a look at why each are important here:

Income

Of course, this is a big one for lenders. Most will have a minimum income requirement for successful applicants, but it varies between providers. For some specialist lenders, you can qualify for a loan while earning as little as $400 to $500 per week. This is still dependent on meeting all the other requirements, though.

Credit reports

Everyone who’s taken out a loan, paid a phone or utilities bill or even held a gym membership will have a credit file. These track your record of paying off your debts. The better this record is, the better your credit score will be.

There are three credit reporting agencies in Australia, whose credit score gradings 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 on your credit history. However, there are many factors involved in producing a score, such as:

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

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 avoid excessive gambling, these will show good conduct on your bank statements. Good financial conduct is a big piece in the car loan puzzle for all lenders.

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 its own employment criteria. For example, some only require a minimum of one month in your current job as a full or part-time employee and three months as a casual employee.

For self-employed applicants, some lenders require to have an ABN for at least six months or up to one full year's worth of financials. You’ll be able to speak to your Savvy consultant about your options as a self-employed operator.

Can I use my partner to boost my income for a car loan?

Yes – applying for a car loan with your partner can boost the available income on your application and potentially increase your chances of approval. This is known as a joint loan, where two borrowers are included on the application and split the repayment of the loan.

Even if both of you are low income earners, two incomes are better than one in the eyes of lenders (provided they meet all their criteria). If splitting your car loan with your partner reduces the likelihood of default, doing so can benefit you.

If you don’t have a partner in a position to co-sign on a car loan, you could also look at a guarantor. This is usually a parent or grandparent who guarantees the repayment of your loan. If you’re unable to complete your repayments, they’ll be responsible for the remainder of the debt. Guarantors can also improve your chances of approval if you’re a low income earner.

Can I get a no interest car loan as a low income earner?

As a low income earner, you may qualify for a No Interest Loan (NIL) to buy a car. This is a service offered by Good Shepherd that allows eligible borrowers to take out a loan up to $5,000 to purchase their vehicle, which can also include motorcycles, scooters and mobility scooters.

Once approved, you’ll repay your loan over your chosen period (up to 24 months) in instalments without any interest of fees. To qualify for one of these loans, you must be able to afford the repayments and meet at least one of the following criteria:

Earn under $70,000 per year (singles) or $100,000 per year (those with a partner or child)
Have experienced family or domestic violence within the last ten years
Be a Health Care Card or Pension Card holder

This is the most affordable way to borrow if you’re buying a car for under or around $5,000. If you need a larger loan, though, Savvy can help you consider the options available for your income.

Top tips for maximising your car loan approval chances with a low income

Reduce your car-buying budget

The smaller your loan, the less strain on your monthly budget and the higher the chances of approval. Take the time to search for value options on the market.
Cut back on unnecessary expenses

If you have a gym membership or streaming subscription you don’t use, it’s eating into your low disposable income. Take stock of your finances before you apply.
Avoid job changes where possible

Frequent job changes will reduce your approval chances, as lenders want to see stability in your income. Don’t move in the lead up to your application if you don’t have to.
Pay a deposit (if you can)

Even a small deposit from your savings can make a difference. This reduces your loan amount, repayments and the interest you’ll pay overall.
Work on improving your credit score

If you’ve had a few credit issues in the past, taking positive steps can help you out. Paying off outstanding loans, keeping up with bills and lowering credit limits can improve your score.