How to apply for a car loan on a disability benefit
Before applying for any type of loan, you must figure out how much you can afford to pay back each month or repayment period (fortnightly or weekly) on top of your existing expenses. The easiest way is to line up your income and usual expenditures (rent, groceries, utilities, etc.) and see what is left over. You may have to do two separate calculations – before the car and after. Having a car may increase your income as you can travel to work, for example. However, car ownership also means you need to pay for fuel, registration, insurance, and upkeep.
Once you’ve got this figure, you should use a car loan calculator to see what type of loans fit your budget. You will need an interest rate and the loan term to complete the calculations. Remember that base interest rates do not give you a complete figure of how much your loan may cost. A comparison rate, which includes most fees and charges expressed as a percentage, will give you a clearer overview of how much you can expect to pay each month. At this stage, you should also do a check on your credit history to see your creditworthiness.
Before applying, you’ll have to get together all your supporting documents. This can speed up the process of your application from your end. Documents can include (but aren’t limited to)
- 100 points of government approved ID
- Centrelink or NDIS income statements – you can access these documents using the MyGov portal
- Other work payslips or income documents
- Financial statements including information on other outstanding debts
- Residential history (if applicable)
These are necessary documents your lender will need to process your application.
If you are having trouble finding a lender that specialises in car loan lending for disability pensioners, you could save time and money by going to a broker. A broker can find multiple loans across a range of lenders which not only increases your chances of approval, but also may give you access to more options, features, and more competitive interest rates.