Can I get a car loan if I’m disabled?
Not all lenders will accept pensions or government benefits as income when assessing loan applications, although some lenders do. Borrowers on disability benefits can still apply for a car loan, although it’s important to calculate whether you can comfortably afford the loan before applying.
What types of income do lenders prefer?
Before a credit grantor accepts a loan application, they will want to be sure that the borrower can pay the repayments. This means that borrowers who can provide proof of regular income (eg payslips from their job) are generally more likely to have their loan applications approved than those who earn less regular income (eg the self-employed). and contractors).
With this in mind, many lenders do not consider temporary Centrelink benefits (eg Youth Allowance or JobSeeker) as acceptable income to help a borrower repay a loan. However, some lenders may consider longer-term benefits to be more consistent, including disability pensions and National Disability Insurance Scheme (NDIS) payments.
Different car finance providers may have different income requirements for potential borrowers, and these may vary more depending on your personal financial situation. Before applying for a car loan, consider contacting a lender to confirm if they will accept disability benefits as income.
Can you afford a car loan?
To find out if you can afford a car loan on your disability benefit, a car loan calculator can help you determine the cost of repayments, based on loan size, interest rates and loan term.
You can compare the results of your calculation to your income (including your disability benefits and any other sources) and expenses to determine how a car loan might fit into your household budget.
What is your credit rating?
It’s also important to consider your credit score when applying for a car loan. Based on your borrowing and repayment history, these scores are generated by credit bureaus and used by lenders to get a better idea of the risk involved in lending you money.
If you’ve applied for and successfully paid off loans and credit cards in the past, you’re more likely to have good credit, which can help improve your chances of being approved for a car loan.
But if you have missed repayments or defaults in your credit history, you’re more likely to have bad credit and it may be more difficult to get a car loan approved.
You can check your credit score for free to get a better idea of how a lender may view you as a borrower and whether you may need to take any additional steps to improve the chances of your car loan application being approved.
What types of car loans can we compare?
In addition to comparing car loans with fixed interest rates (which have regular repayments but may offer less flexibility) or variable interest rates (where the interest charged on your loan may go up or down), you can also choose between a secured auto loan and an unsecured auto loan.
Secured Auto Loans use the value of the vehicle as collateral to secure the loan, which reduces the lender’s risk and is therefore more likely to benefit from a lower interest rate. However, you may be limited to certain newer car models to ensure they retain enough value to secure the loan, and you risk losing the car if you fail to make your repayments.
Unsecured auto loans don’t require you to provide warranties, so they can be used to buy a wider variety of car types and you don’t risk losing your vehicle. However, you are more likely to pay a higher interest rate for an unsecured car loan.
It’s important to compare a variety of different car loan options from a range of potential lenders to get a better idea of which offers are best suited to your financial situation and personal needs. A car loan broker may be able to help you further narrow down the options available and also manage the application process to help you get your approval.