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Low Income Car Loans

All you need to know about low-income car loans in our comprehensive guide, don’t let a low-income hold you back from getting approved.
No obligation. It won't affect your credit score.
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, updated on July 4th, 2023       

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Low Income Car Loans

A considerable amount of income is not a necessity for you to qualify for a car loan. The door to car loans is open to all income groups. There are many lenders in the market. Major banks often are more helpful to usually with higher-income earners and excellent credit records. Whilst, many other lenders are specialised in helping applicants with lower income or bad credit.

I am a low-income earner. Can I get approved for a car loan?

Yes! Low-income earners can get approved for car loans. There are many lenders that aim at helping low-income earners. They will review your application in more detail and offer you a loan amount that fits within your capacity. Most low income earners generally are looking for an inexpensive vehicle used predominately 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.

What are the lenders’ requirements for low-income car loans?

Preparing for a loan can be confusing, as there are many aspects a lender reviews before making a decision. Below we have outlined what a lender will review when making an assessment

Credit Report

Your credit report will give you a credit score. In Australia, lenders usually use Equifax Score (previously called Veda Score) to assess your credit status. Equifax Score will give an individual a result from 0 to 1200. The higher credit score will give you a better chance to get a car loan with low income.

Status Below Average Average Good Very Good Excellent
Equifax Score
0-509
510-621
622-725
726-832
833-1200

Your credit score is based predominately based on your credit history however there are many factors involved to produce a score. Please see below a guideline on factors that make up one's credit score.

Positive Factors Negative Factors
Little credit enquires
Numerous credit enquiries
None payday loans
Change residential address too often
Good repayments history
Defaults; bankruptcy actions
Considerably low credit card limit
Credit infringements
Long credit file history
New/short credit records

Bank Statements Conduct

If your bank statements show good conduct, it will help you to secure a car loan. Your spending habits and lifestyle is 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 however if you’ve missed one payment on an existing facility or over-drawn by a small amount. A small once-off oversight will not cause issues.

Employment Requirements

Each lender has different employment requirements. Some lenders only require a minimum of 1 month working experience for full/part-time employers and 3 months for casual employers in the current job. For self-employed applicants, some lenders require to have ABN for at least 6 months or at least 1 full-years worth of financials.

I receive government benefits, does this help?

Yes! Many lenders in the market will accept government benefits as an income. Here is a lost of the allowable benefits:

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

Each lender has their own requirement. Once you apply you can ask if your Centrelink benefits qualify as income.

How should I set my budget?

You can estimate your repayments by using our free online car loan repayments 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.

My partner has a stable income, can he/she help me to 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 a car loan. By providing your partner’s evidence of income (such as payslips or bank statements), when the lender calculates your living expenses, they will consider splitting the households expenses. This will give you more affordability, increase your loan amount approval and provide my room to pay for the car loan.

Another option, if splitting does not meet the lender’s requirements, is to add your partner as joint borrower. Thus, you and your partner’s 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.

Top Tips for low income car loans

Save up for a deposit

If you are not in a hurry, spending some time to save up for a deposit for your car before you get a loan is a good idea. It not only reduces your initial loan amount but also shows a strong ability to save which goes a long way with all lenders. This, however, is not a must, there are many lenders prepared to offer 100% financing but it can help if possible.

Maintain a stable lifestyle

Lenders like stability. So, it's important where possible to show that through stability in residence and employment. Lenders dislike ongoing movement in an applicants job or place of residence so it's important to keep this in mind when preparing to make an application for a loan.

It is important to keep an eye on your spending habits as well. Live within your means. Try to pay all your bills on time, and do not overdraw on your accounts too often. This is going to play a major role in getting a loan approved.

Payout your payday loans if you have any

Some lenders will decline a car loan if the applicant has over 2 payday loans at once. It is 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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