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How to Apply For a Loan With Low Income

Mar 12, 2022 | Finance Tips

Car envy can get to the best of us, but there are ways that you can be driving your dream car even if you have a low income.

When saving up enough of a lump sum seems impossible, car finance doesn’t have to be out of reach for lower-income earners. Even if you’re receiving Centrelink payments, Finance One may have a solution to get you in the driver’s seat of your dream wheels.

If you’ve been longing for a new car but are worried that you won’t be able to get a loan with low income, keep reading as we hand over some of the keys to helping you get your dream car with a Car Loan for Low Income.


10 ideas to help get approved for a car loan

When you’re considering applying for a car loan, there’s a lot of information out there. When family and friends chip in with their advice about loans, it can be confusing to know what’s right and what’s hearsay.

As one of Australia’s leading lenders to those with low income or poor credit history, we’re known for our compassionate and personalised approach. Let us cut through the noise and outline ten tips for helping you get approved funds for your dream car.

1 . Be realistic & set yourself a budget

While we’re certainly not here to dampen your dreams, staying realistic about your next vehicle can help you achieve the dream sooner. There’s no denying that luxury vehicles come with luxury price tags, so understanding what it is that you want in a car (before applying) can give you a better chance of finding a ride that ticks all your boxes and that’s affordable.

You might even like to use our car loan calculator to give you an estimate as to how much your monthly payments might be if you were to be approved for a loan. This might even help you narrow down what type of vehicle is going to be within your price range.

Preparing a budget for yourself can also help you:

  • understand your current bills and expenses,
  • limit pointless spending,
  • start saving for a deposit, registration and insurance expenses,
  • start saving for a deposit, registration and insurance expenses,
  • Know how much you’ve got to put towards regular payments on a car loan.

The added bonus of setting a budget before you apply for a loan is that it could help you get into the groove of being disciplined with your pay. Also, it will likely help demonstrate to your lender your reliability to meet loan repayments. It could even help push you up to a good credit score!

2 . Pay off any payday loans

These types of short term loans can be great for getting cash quickly when you need it, but having outstanding pay advance loans can make you appear as though you cannot manage your expenses. Making extra repayments to pay these off quicker could mean that a potential lender can give you a larger loan amount for a better vehicle.

3. Whip your bank accounts into shape

Typically, we like to see that you have not overdrawn your bank account for at least six months prior to you applying for a loan. We do check your bank statements during the application process, so if we can see that you can spend wisely, then it goes a long way in helping to prove that you can responsibly take care of regular repayments.

4 . Review your credit score before applying

We know that life doesn’t always go to plan, and that sometimes your credit history reflects this. At Finance One, we’re compassionate in our approach but do also need to look at your credit score when we assess your application (our decision isn’t based solely on your score though, so don’t stress!).

Credit reporting agencies can show you if there are any defaults that are incorrectly recorded, and what’s impacted your credit score in the past. It’s important to make sure your credit history is recorded correctly because defaults and late payments can have significant impacts.

Keeping on top of your bills for 6-12 months before applying for a car loan can really help to strengthen your credit score and can even give you a better chance of being approved.

Did you know?

Multiple credit checks in a short period of time can actually negatively affect your credit history and your chances of being approved for credit?


5 . Go for a longer loan term

We offer loan terms anywhere from 1 year to 7 years for vehicle finance. The longer the repayment period, the smaller your regular repayments are, which makes them easier to afford and can give you a better chance of being approved.

Top Tip

Talk to us about locking in your interest rate if you are approved for a loan. This way, you will have the same repayments and don’t need to worry about any rises in interest rates while you’re repaying your car loan.

Talk to us now

6 . Talk to your lender about balloon payments

A balloon payment is a lump sum payment at the end of your loan. This means that your repayments are less throughout your loan, and then at the end, there is a one-off balloon payment to pay the loan out. This can help make for more affordable monthly payments.

A downside to balloon payments is that you’ll need to make sure you have enough money at the end to pay the balloon payment out for your vehicle. If you have a longer loan term, chances are your income may increase in this time, allowing you to save up before the loan ends.

7 . Look at used cars

The thrill of that new car smell can be enticing enough to let a car dealership talk you into buying off the showroom floor. While we don’t deny the pleasures of a shiny new interior, a new vehicle for you doesn’t need to be brand new. Getting yourself the best deal can often mean looking at the cheaper option of used cars.

Finding a well maintained second-hand vehicle is sometimes just as good as a new one. You can look at private sales, otherwise, car dealers can help find you a new or used car. (Be wary of dealerships upselling you extras such as rims, gap cover or roadside assist, which you may not need or can be sourced cheaper elsewhere).

8 . Get a second income

Lenders like us love to see that you’re serious about money. If your sole source of income is low or if you rely on Centrelink payments, getting a second income, whether it’s a small side-hustle, or a part-time weekend gig, can really boost your chances of being able to get a car loan.

9 . Put down a deposit

Putting a budget in place early could mean you save up a little stash of cash prior to applying for a car loan. Why not use this money to put down a deposit towards your loan, if you can afford to? Not only will this reduce your loan amount to save you interest in the long run, but your lender will likely look at your application move favourably.

10 . Opt for a secured car loan

Unsecured loans such as a personal loan offered by banks and other lenders may not always be the best option when you’re looking to buy a new or used car. Usually, the interest rate is higher with an unsecured loan as the loan isn’t secured by the car.

Secured loans such as the car loans you can access through Finance One typically come with lower interest rates and can mean you can more confidently afford your repayments.

Are car loans a good idea?

Accessing a car loan can make a huge difference to your life if it means hitting the road with confidence, providing better safety for your family or gaining your own independence. Car loans don’t need to equal a life sentence to debt for low-income earners. Keeping on top of your car loan repayments (especially making extra repayments) can actually help to build a solid credit history and improve your credit score over time.

Loans from good quality lenders can be a great way for lower-income earners to finance the car they want and need now, while helping to build and secure a solid credit score for the future.

Can I still apply for a car loan with bad credit?

Many lenders avoid giving out car loans to those with bad credit. However, there are still financing options available.

Finance One has helped thousands of Aussies with:

  • bad credit history or a low credit score,
  • no credit history,
  • previous defaults,
  • past bankruptcy,
  • Centrelink payments as their sole source of income.

If you qualify to get a car loan, the interest rate applicable to you will vary depending on your financial situation. We aren’t like other lenders out there; we take into account your full situation and are mostly concerned with your ability to meet your car loan repayments.

We are more than happy to work through your available options with you.

Apply for a Car Loan

Am I able to apply for a car loan while receiving Centrelink payments?

Car finance doesn’t have to be out of reach for those who receive Centrelink payments. We have helped plenty of people, who receive Centrelink benefits, access a car loan.

We can even assess people receiving the Centrelink Pension for car loans at an affordable interest rate, provided they satisfy all normal lending requirements and we can see that they have the capacity to repay the credit in accordance with the loan agreement.

You can read more about car loans for those on Centrelink benefits here.


Who can offer car loans for low income families?

Comparison websites can be helpful in understanding the interest rates and options that may apply to you. Exercise caution using comparison websites though, as often they will not be upfront about other fees and charges, making the competitive rates they advertised, less competitive in the end.

Speaking to experienced brokers or a lender who takes a personalised approach to car loans, such as Finance One, can mean the difference between declining and driving!

Contact us to see if you can finance your dream car through Finance One, today!

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information.

Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.

Finance One means “Fin One Pty Ltd – ABN: 80 139 719 903 – ACL: 387528”

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Makala Elliott

Makala is the Marketing Manager at Finance One. She has worked in the Finance and Lending industry for over 10 years, gathering a wealth of experience. She is passionate about helping Australians get back on track with their finances by passing on her knowledge.

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