Car Loans for Pensioners
Compare a range of competitive car loan rates for pensioners. Get approved the easy way with Savvy.
Fact checked
Looking for a car loan but living on a government pension? You’ve come to the right place. Savvy works with Australians from all walks of life to help them find car finance deals to suit their needs, and those receiving pension payments are no exception.
We can help secure you a car loan by partnering with a vast range of lenders who can work with diverse income streams, including employment income, pension payments and a combination of the two. Start your application now with a quick quote and find out your car loan options today with Savvy!
What are pensioner car loans and how do they work?
A pensioner car loan is simply a car loan product taken out by someone who receives a pension or benefits from Centrelink. It’s designed to help you purchase a vehicle which, in most cases, acts as collateral for your loan.
You’ll repay your loan over a specified period, which can range from one to seven years (depending on your profile and the lender you choose), with interest and fees. In this respect, it’s no different from any other car loan.
All applicants will be required to meet their lender’s eligibility criteria before being approved. Even if you receive government benefits, such as a pension, you can still get the green light for your car loan with many lenders.
How do I qualify for a pensioner car loan?
The specific eligibility criteria for car loans will vary depending on your lender. However, the main points to consider include the following:
- You must be at least 18 years old
- You must be an Australian citizen or permanent resident (some options exist for temporary visa holders, but pensions generally aren’t open to these individuals)
- You must be earning a consistent income from one or more sources which is enough to support your repayments and meets your lender’s minimum threshold (which may be around $20,000 to $26,000)
- You must meet your lender’s credit score requirements (if applicable)
- You must be able to supply all documents requested by your lender
Another key requirement is that your pension or Centrelink benefit is accepted as income by your lender. Once again, different lenders will have different requirements in this area, but the benefits that may be accepted include:
- Aged pension
- Veterans’ pension
- Disability support pension
- Carers payment
- Single parent payment
- Family Tax Benefit A or B
Will I be able to get a car loan if a Centrelink pension is my only source of income?
You may be able to take out a car loan with 100% of your income coming from Centrelink. However, many lenders won’t accept this and will require you to be earning at least 50% of your income from other, non-Centrelink sources. You can speak with your Savvy consultant about what your options are if your pension is your only source of income.
Can I get a no-interest car loan as a pensioner?
Good Shepherd Australia New Zealand offers No Interest Loans (NILs), which is a scheme providing low-income households and individuals with short-term loans to cover essential expenses. A pilot program has been run for loans up to $5,000 for the purchase of vehicles but, as of May 2024, it’s on hold. Good Shepherd says that this program will reopen once their backlog is cleared, so you may be able to take out a NIL for your car.
What types of loan can I choose from as a pensioner?
There are two main types of loan on offer:
- Secured loans: these use the value of the car as collateral against the loan. This means the car could be repossessed if you default on the repayments. Secured loans are available for cars that meet your lender’s criteria relating to age and condition.
- Unsecured loans: these don’t have any asset to back them up and so usually come with higher interest rates than secured loans. These loans are generally recommended for cars that don’t meet your lender’s vehicle requirements.
These loans will either come with fixed or variable interest. Fixed rates are locked in at the start of your loan, adding stability to your repayments and protecting you against rate rises. Variable rates remain open to market fluctuation, meaning you can benefit from rate decreases, and may provide greater flexibility to pay your loan off sooner without being charged fees.
How much can I borrow for my car loan as a pensioner?
The amount you’re able to borrow will be determined by several key factors, including the following:
- Your income and expenses: the more income you have available, the more you’ll be able to afford.
- Your credit score: borrowers who have bad credit or have other blemishes on their credit file may not be approved for as great a sum.
- Your car’s value: secured car loan amounts are tied to the purchase price of the vehicle, so this will also give an indication of the amount you’ll be able to borrow.
- Your lender’s requirements: the way your application is assessed will be different with each lender. Some may be more willing to approve a larger amount than others, for instance.
Your Savvy consultant will take your initial quote and run an affordability check based on the amount you’re looking for and your desired loan term compared with your income to determine whether you can afford to comfortably manage repayments. We’ll help you proceed with your application if you can reasonably afford it but, if not, we’ll come back to you and let you know what sum you may be approved for.
How much will my pensioner car loan cost?
The cost of your car loan will depend on a range of variables, such as:
- Your interest rate and fees: the rate set on your loan will be a significant cost factor, as will the establishment, ongoing and early repayment fees (if applicable).
- Your loan term: the shorter your loan term, the less interest you’ll pay overall.
- Your loan amount: larger sums will attract more interest, so paying a deposit (if you’re able to) can save you on your loan.
- Your repayment frequency: if you decide to make additional repayments, you can pay off your loan earlier and save on interest as a result (though some lenders will charge early break fees for this).
- Whether you add a balloon payment: a balloon or residual payment will help decrease your ongoing costs, but the interest you’ll pay will be higher.
Even a small deposit or rate discount can help you save a significant amount. For example, let’s say you took out a $20,000 loan with a 5.00% p.a. interest rate over five years. If you have a 5% deposit ($1,000) you could save $132.27 over the loan term, 10% ($2,000) would save you $264.55 and 20% ($4,000) would save you $529.10.
Why you can trust Savvy’s car loan service
Access to flexible lenders
We partner with specialised lenders who are dedicated to working with customers receiving a pension, maximising your approval chances.
No application is too difficult
It doesn’t matter who or where you are across Australia: we treat every application as an opportunity to help you access much-needed financing.
Expert brokers
Our experienced loan brokers are here to walk you through the application process from start to finish and find suitable lenders and offers for your situation.
What our customers say about their finance experience
Savvy is rated 4.8 for customer satisfaction by 3390 customers.
Your questions about car loans on pension payments
Brands you can trust
