Centrelink Payments? Getting a car loan
Loans For People On Centrelink – It’s Possible With Zoom!
Are you currently on Centrelink payments and finding it hard to get an approval for a car loan? Zoom can make loans for people on Centrelink possible. Here are some questions and handy tips you might want to consider initially.
Do I meet the minimum income requirements?
Although the legal requirements vary on the type of loan and the amount you are borrowing, all credit providers work on the basic principle of affordability. Majority of the financiers in Australia use either the HPI (Henderson Poverty Index) or HEM (Household Expenditure Measure) guide to establish average monthly expenses based on whether the customer is single/de facto and how many dependents they have in their care. After taking these guides into consideration along with any additional expenses such as rent and existing liabilities (i.e loans, credit cards & hire purchases etc), the credit provider can establish what level of affordability is available based on your current income.
Although these measures tend to be very accurate, they do not take personal circumstances and habits into consideration. You should always look at your own spending habits/budget to ensure you will be comfortable with any additional borrowing. Government’s MoneySmart website has an easy to use budget planner/calculator to assist you in working out how much you can afford to borrow.
Am I being realistic about how much I can borrow?
Due to the above-mentioned requirements, it has become increasingly difficult for customers reliant solely on Centrelink Payments to obtain fair interest loans on newer vehicles. To avoid disappointment on not getting a car that you have your eyes on, we always encourage you to obtain a pre-approval for an amount you can afford and then look for a suitable vehicle within your approval limits (note that most Zoom Car loans finance packages allow for both dealer and private sale vehicles).
Are your finances up-to-date?
The law requires that all credit providers must verify your current financial situation. This may include being asked to provide your bank statements, payslips and/or Centrelink statements, copies of bills, copies of other credit contracts and property rental statements showing if you are up to date with your rent. The number of documents a lender asks you for will depend on things like whether you are already known to them, your credit history and the information contained in your bank statements.
At the time of your application, you should ensure that you can meet as many of these guidelines as possible to increase your chance of obtaining a desired approval*
- Ensure your bank account conduct is at an acceptable level (avoid overdrawing your account, ensure no direct debit payments are dishonouring and cancel any debits that are no longer current)
- Make sure your rent/board or mortgage payments are up to date. Most finance institutions will perform a residential check with your landlord
- Having defaults is OK! However, it always helps if you can show the financier that you have made arrangements to pay them off or to get them resolved
- Be truthful during the application process. Financial Institutions have access to many tools to check the information that has been supplied.
Am I getting a fair deal on the car finance?
Although there are set fees/charges and interest rates the credit providers are allowed to charge, there are many credit providers that are either knowingly breaching the code or simply working around the legislation. A common way of enticing customers into high-cost loans is to offer inviting interest rates on the finance (that fall within the government requirements) on used vehicles. The catch? the vehicle must be purchased through their authorized car yards at often exorbitant prices. i.e a vehicle might normally be worth $3,000 but the selling price is listed at $8,000!
You should always check all your options before you borrow and ensure that you use the free resources available throughout Australia to assist you when borrowing funds of any nature. For information about other options for managing bills and debts you can ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.
*Each lender has specific lending policies and guidelines so please use the tips as a general guide only.