If you want to buy a car, but don’t have the cash to buy it outright, you might consider getting a car loan. For many, getting a car loan depends on whether your employment provides enough income for you to make repayments.  

However, if you’re retired, or receive government benefits like the pension, you could be eligible. As long as you meet lenders’ criteria and prove you can cover repayments, a pensioner car loan could be for you. 

Who is eligible for a Pensioner Car Loan? 

Criteria for pensioner car loans may vary between lenders. It’s important you review each lender’s terms and conditions carefully before signing anything. 

Generally, even if you are not working, your pension payments will be counted as income. Lenders assess your income to see if you can meet repayments under various interest rate scenarios.  

Lender criteria can include: 

Age restrictions: You must be over 18-years old to apply for a car loan - this is the same for pensioner car loans.  

Income restrictions: Your pension must be enough to cover your repayments and expenses. 'Supplementary income' - either from employment or superannuation - may improve your chances of approval. 

Residency restrictions: You must be an Australian resident to apply for a pensioner car loan. If you're in Australia temporarily, you may need to apply for a temporary resident car loan. 

Pension type restrictions: You may be eligible if you receive the following pensions: aged or disability pension or Centrelink payments such as parenting or carer payments. 

Some allowances, like Newstart, Youth Allowance and Austudy, may not qualify, and you could need to prove supplementary income. 

Can I get a car loan on Centrelink payments? 

If Centrelink is your main source of income, you may get a car loan if you meet the lender’s criteria. The big four banks may be less likely to provide you with a pensioner car loan if you are not in employment. However, smaller lenders, online lenders and credit unions could be more helpful.  

To see if you qualify, check the minimum income eligibility on the loan you’re considering. If the loan amount is low, you may qualify for a short-term advance, but this is assessed on a case by case basis. 

Who can get a pensioner car loan?

As the name suggests, pensioner car loans are loans available to people receiving a pension. Pensions are government payments provided to residents if they are unable to gain employment.  

Types of pensions include age, disability and parenting pensions. They also cover pensions for carers of the elderly or disabled. If you're on a pension in Australia, you may be wondering what types of car loans are available to you. 

What features of a pensioner car loan should you look out for  

Unsecured pensioner car loans 

An unsecured pensioner car loan is not secured by the value of an asset. These loans are more risky for lenders, and so may carry higher interest rates. Unsecured car loans are mostly available to borrowers who prove they are credible. This is because if you default on an unsecured pensioner car loan, the lender cannot repossess the car. 

Secured pensioner car loans 

Secured pensioner car loans are secured by an asset - usually the car - to reduce financial risk to the lender. If you default on your repayments, the lender can repossess the vehicle you have used as security. These are more common with car loans as the lender can sell the vehicle to recoup their losses if you default, reducing their risk. 

Fixed rate pensioner car loans 

Pensioner car loans with fixed rates have the same interest rate applied to the loan for the entire loan term. You agree to pay a set amount of interest each month, so your repayments never increasewhich gives you certaintyHowever, it could also mean missing out on savings if lenders reduce their interest rates. 

Variable rate pensioner car loans 

The interest rate on variable rate car loans can change over the loan's termat the lender’s discretion. This type of car loan can save you money if there’s a rate cut, as your repayments would fall. However, if your lender raises interest rates, your repayments could increase and you could end up paying more over the life of the loan than if you had a fixed loan. 

Which is best, fixed or variable? 

The best loan will depend entirely upon your financial situation. If you're on a pension, an unexpected increase in your repayment amounts could cause you ffinancial difficulties. 

When you are restricted to a specific amount per month in income, and do not have the capacity to make any supplementary income, you may find a fixed rate loan works best. However, if you don’t want to miss out on potential savings, you could choose a variable loan but budget to cover an increase of up to 3 percentage points in the loan’s interest rate.  

How much can you borrow with a pensioner car loan 

The amount you will be able to borrow will vary from lender to lender, and will also depend upon your individual circumstances. Borrowing a smaller amount means you have less to repay. 

If you can, try to save for a deposit. This will show the lender you are able to save money when receiving a pension and improve your credibility with the lender. It will also reduce the total interest you pay over the loan’s term compared to taking out a loan when you do have a deposit.  

Employment status 

While you do not need to be employed to be eligible for a pensioner car loan, youoptions will be more limited than those open to someone who is employed. You may be required to agree to a shorter loan term, higher repayments or a higher interest rate. If you have supplementary income, like part time work or superannuation payments, the lender may increase your loan amount.  

Interest rates 

As you compare pensioner car loans, you may receive different interest rates from lenders as a result of your financial situation. Lenders charge higher interest rates on loans that are seen as higher risk. If you are a pensioner and you own assets, these can be used as security on a car loan to reduce the interest rate you pay as they lower the risk to the lender.  

Budget capabilities 

Before you decide on how much you want to borrow, be sensible about your budget. Look at your pension payments against your expenses and be honest with yourself about how much you can afford to repay. Assess your repayment capabilities prior to making any applications to check that repaying a loan is feasible. 

Find and compare pensioner car loans

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Product
Advertised Rate
Comparison Rate*
Company
Monthly repayment
Loan amount
Total repayments
Real Time Rating™
Go to site

15.99%

Variable

16.84%

ANZ

$729

$5k to $50k

1.40

/ 5
Go to site
More details

2.99%

Variable

3.60%

Queensland Country Bank

$539

$1k to $75k

4.77

/ 5
More details

From

3.60%

Variable

4.51%

Australian Military Bank

$547

$4k to $80k

4.24

/ 5
More details

3.97%

Fixed

4.51%

loans.com.au

$552

$5k to $100k

4.11

/ 5
More details

3.99%

Fixed

4.60%

Queensland Country Bank

$552

$1k to $75k

4.01

/ 5
More details

From

4.40%

Variable

4.88%

ebroker.com.au

$558

$5k to $150k

3.87

/ 5
More details

From

3.85%

Variable

4.94%

Finance Ezi

$550

$10k to $250k

3.73

/ 5
More details

4.80%

Variable

4.94%

First Choice Credit Union

$563

From $30k

3.79

/ 5
More details

4.69%

Variable

4.96%

Police Credit Union

$562

From $20k

3.83

/ 5
More details

4.69%

Fixed

4.96%

Police Credit Union

$562

From $20k

3.93

/ 5
More details

4.65%

Fixed

4.99%

People's Choice Credit Union

$561

$20k to $100k

3.82

/ 5
More details

From

4.99%

Variable

4.99%

Orange Credit Union

$566

From $15k

3.82

/ 5
More details

4.74%

Variable

5.01%

Transport Mutual Credit Union

$563

From $5k

3.74

/ 5
More details

4.49%

Fixed

5.10%

Auswide Bank

$559

$5k to $75k

3.50

/ 5
More details

4.89%

Fixed

5.16%

Beyond Bank Australia

$565

$25k to $125k

3.73

/ 5
More details

4.89%

Fixed

5.16%

MOVE Bank

$565

$10k to $150k

3.85

/ 5
More details

4.99%

Variable

5.20%

Central West Credit Union

$566

From $30k

3.60

/ 5
More details

4.99%

Fixed

5.20%

Horizon Bank

$566

From $5k

3.72

/ 5
More details

4.67%

Fixed

5.22%

loans.com.au

$562

$5k to $100k

3.71

/ 5
More details

4.99%

Variable

5.29%

Transport Mutual Credit Union

$566

From $5k

3.80

/ 5
More details

4.99%

Variable

5.35%

The Mac

$566

From $1k

3.77

/ 5
More details

3.85%

Variable

5.43%

Credit One

$550

$10k to $250k

3.45

/ 5
More details

From

4.89%

Fixed

5.44%

Plenti

$565

$10k to $100k

3.71

/ 5
More details

5.45%

Fixed

5.45%

Bank Australia

$572

From $1k

3.40

/ 5
More details

5.29%

Variable

5.56%

Bank First

$570

From $10k

3.52

/ 5
More details

5.29%

Fixed

5.56%

Bank First

$570

From $10k

3.52

/ 5
More details

4.05%

Fixed

5.63%

Stratton

$553

$10k to $250k

3.30

/ 5
More details

From

4.99%

Fixed

5.69%

RACV

$566

From $5k

3.38

/ 5
More details

5.45%

Variable

5.80%

Hunter United

$572

$10k to $100k

3.08

/ 5
More details

From

5.29%

Fixed

5.84%

Plenti

$570

$10k to $100k

3.35

/ 5
More details

From

5.29%

Fixed

5.84%

Plenti

$570

$10k to $100k

3.50

/ 5
More details

5.80%

Variable

5.84%

Laboratories Credit Union

$577

$1k to $50k

3.41

/ 5
More details

5.84%

Variable

5.84%

Lysaght Credit Union

$578

From $5k

3.24

/ 5
More details

5.49%

Fixed

5.87%

Greater Bank

$573

$5k to $100k

3.40

/ 5
More details

5.60%

Fixed

5.88%

Illawarra Credit Union

$574

$10k to $50k

3.39

/ 5
More details

5.64%

Fixed

5.92%

Illawarra Credit Union

$575

$10k to $50k

3.37

/ 5
More details

5.59%

Variable

5.94%

Goldfields Money

$574

From $5k

3.16

/ 5
More details

5.65%

Variable

6.00%

BCU

$575

$5k to $65k