What is a pensioner car loan?

If you want to buy a new 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 still 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 aged pension, disability support pension, or Centrelink payments such as parenting or carer payments. Some allowances, like JobSeeker (formerly 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 credit providers 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.

Will I qualify for 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.

Pensioner car loan features to consider:

Unsecured pensioner car loans 

An unsecured 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 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 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 increase, which gives you certainty. However, 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 term, at 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. 

Choosing between fixed and variable rate car loans

Deciding whether a fixed or variable interest rate is the right choice for you will ultimately depend on your financial situation. If you're on a pension, an unexpected increase in your repayment amounts could potentially cause you financial 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 to be more manageable. However, if you don’t want to miss out on potential savings, you could choose a variable loan and budget to cover an increase of up to 3 percentage points on 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 on your individual circumstances. Borrowing a smaller amount means you have less to repay. 

You might also like to consider saving for a deposit in order to show the lender you are able to save money when receiving a pension, and potentially improve your credibility with the lender.

Here are some of the factors that may contribute to determining how much you can borrow:

Employment status

While you do not need to be employed to be eligible for a pensioner car loan, your options 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 less competitive 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. And remember, most lenders will also charge fees on top of interest, so consider comparing different comparison rates for a better idea of the overall cost of the loan.

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. RateCity's car loan repayment calculator may come in handy here.

How can you apply for a pensioner car loan 

If you qualify for a pensioner car loan, the next step is to conduct a thorough comparison of car loans from various lenders. 

Before you apply, make sure you meet the lender requirements for the loan of your choice. This is because if you are rejected from a car loan application, it may negatively impact your credit score. 

You might also like to consider calling the lender or a financial broker before you make a decision.

What do lenders look for when approving a pensioner car loan? 

As with all loans, lenders assess your financial situation before they agree to finance the purchase of your car. 

When assessing your situation, lenders will look at: 

  • What type of pension you receive  
  • The ‘income’ you receive from pension payments
  • Your credit history - this accounts for both good and bad credit events  
  • The value of your assets (including your home, if you own one)
  • Your residency status - whether you are a permanent Australian resident or citizen
  • The proposed loan amount, and your ability to repay the principal loan amount
  • The proposed loan term, and your ability to repay the interest on that loan

How do you improve your chances of being approved for a pensioner car loan?

  • Save for a deposit: If you are able to save a deposit before applying for a car loan, you can reduce the total amount you need to borrow. This will reduce the overall interest you will repay over your loan term, and you will show your ability to save. 
  • Use an asset as collateral: You are more likely to be accepted for a car loan if you have an asset you can use as security against the loan. This reduces the risk to the lender, as they can recoup their losses by selling the asset you use as collateral. This can also result in lower interest rates on your pensioner car loan.

How do you choose the right pensioner car loan for you?

When it comes to financial products, there is no one size fits all. Choosing the right pensioner car loan for you will depend upon a variety of different factors. Consider asking yourself the following questions to get a better understanding of what kind of loan may be right for you:  

  • Do you prefer a fixed rate or variable rate loan?
  • Do you want to buy a new or used car?
  • Will you get an unsecured or secured car loan?
  • How much will you borrow?
  • Do you have supplementary income or do you only receive pension payments?

Creating a car loan budget  

Before you get a car loan, new or used, it’s crucial to consider all costs, in addition to the cost of the car itself. You will pay interest on the amount you borrow, along with various fees and charges, and the onus is on you to determine exactly how much that is. 

When you create your car loan budget, it's important to look at the following: 

  • Cost of the car 
  • Car insurance fees 
  • Registration fees / stamp duty tax
  • Repairs and maintenance
  • Fuel and road tolls
  • Membership of roadside assistance organisations
  • Monthly car loan repayments
  • The loan term
  • Car loan fees and interest  

How much will you really pay? 

As with any loan, it’s important to read the Product Disclosure Statement (PDS) or fact sheets for each pensioner car loan option you’re considering. These will outline all the fees and costs associated with your loan, some of which may not be prominently displayed. 

You should be able to find these on the lender’s website, but these documents can often be missed. If you struggle to find the PDS or fact sheets for any loan product, reach out to the lender and ask for them to send it to you before you begin the application process.

How to calculate your total repayments 

Making sure you are aware of every fee and charge that could be applied to your loan is crucial for making the most informed financial decision.   

To check how much a loan may cost you over the entire term, you can use our handy car loan calculator

RateCity analysis shows that a $30,000 car loan with an interest rate of 8% per cent and an annual fee of $100 results in a monthly repayment of $617. 

That equates to $6,998 in interest that you will pay on your loan over the five year term, or 23 per cent more than your original loan amount.

Can I get a loan if I am on aged pension?

Yes, there are certain lenders that provide loans for people on aged pensions. Your viability for a loan will be assessed by a lender by your credit report and your income. They will also take into account any assets you have that you may want to secure the loan with. The better your credit score, the more likely you are to be accepted for a loan, and the lower the interest you will have to pay on that loan.  

If you have a bad credit rating and are on an aged pension however, don’t despair, because there are specialised lenders who still may be willing to provide you with a loan.

Can I get car finance on a pension?


Yes, as long as you meet basic criteria set out by lenders you are eligible for car finance. Your interest rate will be determined based on your financial history which can be found in your credit report, your income and any property you may own.

Comparing car loans for pensioners before you settle on one is important though, if you want to secure the best possible loan for your circumstances.

Where can I get a student car loan?

Student car loans are not a necessarily a product in and of themselves, but what you may be looking for is a guarantor car loan.

A guarantor car loan has a third-party act as a form of guarantee for your loan application, telling the bank or lender that if you default on your loan, someone will pay the loan repayments.

Going guarantor on a car loan is no new thing, and before internet-based credit scores, guarantor car loan applicants would apply for loans with a guarantor or property owner who could vouch for the person borrowing the loan.

To get a guarantor car loan, you’ll need someone willing to act as a guarantor for your car loan.

What is a secured car loan?

A secured car loan is a loan that is connected to a form of security, or collateral. Generally, the security for a car loan is the car itself. If you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

How to find a great car loan

Historically, finding a great car loan would require excess research ranging from visiting an excess of websites or making phone calls, but technology has moved on. Using RateCity, Australia’s leading financial comparison service, you can check out great deals from a range of lenders on the one site.

To start, select the amount you want to borrow and the length of the loan, narrowing your search to show just fixed or variable interest rate results.

Once you’ve indicated your search criteria, you’ll see an immediate list of lenders, ranked by interest rate or application fees. You’ll also be able to view the monthly repayment amount for each result, helping you to know what you can afford.

Up to six products can be compared side-by-side, complete with more information about each car loan, giving you more information about your options.

When comparing your car loan options, it’s ideal to keep in mind some points find a great car loan for your needs. Consider the following:

  • Choosing a low interest car loan can reduce costs
  • Selecting an option with low fees and charges is ideal, because these can really add up
  • Be aware of penalties, such as early exit penalties if you pay off the loan sooner than expected
  • Consider the features that best suit your situation

There are many ways to ensure that you get a great car loan. Ultimately, you’ll end up with the best deal by doing your research and selecting the most suitable product for you.

What is an unsecured car loan?

An unsecured car loan is a loan that is not connected to a form of security, or collateral. Not all lenders provide unsecured car loans – and if they do, they generally charge higher interest rates for their unsecured car loans than their secured car loans.

What is a guarantor car loan?

A guarantor car loan is a type of loan that features a guarantor on the agreement. The guarantor is a third-party individual, often a friend or relative, who guarantees the loan will be repaid if the borrower defaults on the car loan.

Guarantor car loans are often geared at people who might otherwise struggle being accepted for a secured car loan when purchasing a vehicle. Some of the reasons might include a lack of credit history such as with a student or young person, if there’s bad credit, or age as a factor such as with pensioners.

What is a guarantor on a car loan?

A guarantor on a car loan is a third party, usually a relative or friend, who guarantees to meet the repayments of a loan for the purchase of a car, if the borrower/owner of the car defaults on the loan.

Guarantor car loans can be useful for people who would otherwise struggle in being accepted for credit to purchase a vehicle. These may include people with bad credit, students and young people who may have no credit history, as well as some pensioners.

Many lenders offer guarantor car loans, guarantor personal loans and guarantor home loans, because of the significantly reduced risk to the lender.

How do you get a car loan?

There are four different ways you can get a car loan. You can go straight to a lender. You can get a finance broker to organise a car loan for you. You can get ‘dealer finance’ – which is when the car dealer organises a car loan for you. Or you can organise your own car loan through a comparison website, like RateCity.

Whichever method you choose, you will need to provide proof of identification, proof of income and proof of savings. So you may be asked for any combination of passport, driver’s licence, bank statements, payslips, tax returns and utility bills. You might also be asked to provide proof of insurance.

What is a loan term?

The loan term is the amount of time the lender gives you to repay the car loan. For example, if you take out a $20,000 car loan with a five-year loan term, you would be expected to pay off the entire $20,000 (plus interest) within five years.

Can I get a discounted student car loan?

Being a student is tough enough, and while you might find the odd student discount on movies and technology, the same can’t be said about car loans, as you can’t really get a discounted student car loan.

Lenders make money on the interest and fees that they charge with loans, and the lowest interest and fees are given to the most reliable credit holders: people with excellent credit history.

As a student, you are unlikely to have enough on your credit report to warrant an excellent history. There are however, ways of getting a lower interest car loan if you can’t get an interest-free loan from the bank of mum and dad. One way of doing this may be through getting a guarantor car loan, which can get you a secured car loan by setting your parents up as guarantors.

What are the pros and cons of guarantor car loans?

Like all things, there are positives and negatives to guarantor car loans, though one may outweigh the other depending on your needs.

Guarantor car loan pros may include that you’re more likely to be approved for a long if you have no credit or a history with bad credit, that you’re more likely to secure a car loan with a lower interest rate, and that because your guarantor car loan is based on a relationship, you will be more inclined to meet your repayment schedule.

However, there are negatives, as well. Guarantor car loan cons may include leaving a detrimental mark on a personal relationship with added strain if you don’t meet your repayments, and you may take out a loan that you can’t actually afford.

Weighing these pros and cons will give you a greater understanding of whether a guarantor loan is ideal for your circumstances.

What is collateral?

Collateral, or security, is an asset you agree to surrender to a lender if you fail to repay a loan. Generally, the collateral for a car loan is the car itself. So if you fail to repay the loan, the lender might seize your car, sell it and then use the proceeds to recover their debt.

What is the role of a guarantor on a car loan?

The role of a guarantor on a car loan is to meet repayments if the borrower of the loan were to default for any reason, such as not being able to afford it.

Useful for loan applicants with poor or bad credit, a guarantor makes it possible for these loans to be made secure, because there’s less risk for a lender overall.

Companies will likely give fair warning before they charge a guarantor for the costs of the loan, or before they repossess anything of the guarantor’s that may have been used as security. Still, it is important for a car loan guarantor to fully understand their responsibilities before they commit to the transaction.

Can I get a car loan with poor credit?

Poor credit doesn’t necessarily mean you won’t be able to get finance for your car purchase, though your options aren’t likely to be the same as someone with good credit.

In fact, a number of specialist lenders exist offering car finance for customers with poor credit, able to provide access to bad credit car loans.

However having a history of poor credit will likely mark you as a potential risk to lenders, so your car financing needs could see higher fees and interest rates. Alternatively, consider a secured car loan, which is a type of loan that uses the car you purchase as collateral, reducing the risk.

Other options include getting someone close to act as a guarantor for your car loan, or to talk to a broker about a personalised rate specific to your circumstances.

How to get pre-approval for your ANZ car loan?

Getting pre-approval on your car loan can give you a good idea of how much you may be allowed to borrow. This will help you set your limits while selecting your car. You can apply for pre-approval for an ANZ car loan by filling out a simple online application form, where you’ll have to submit relevant identity, employment and income documentation. 

ANZ will then conduct a credit check based on your application and documentation. It’s important to note that this could have an impact on your credit history. Based on your credit and income documentation analysis, ANZ will provide an amount they are willing to give you as a loan. After this, you can find the right car that matches the proposed loan amount and send it through your final loan application. 

It’s important to remember that pre-approval gives you an indication of how much you can borrow from ANZ to purchase your car, but it doesn’t guarantee the final approval. 

What are loan repayments?

Loan repayments are the regular payments you make to pay off your car loan. Loan repayments generally occur on a monthly basis, although many lenders will also give you the option of making fortnightly or weekly loan repayments.

I’ve been denied a car loan before; can I still get car finance?

Even if you’ve been denied a car loan before, you might still be able to get car finance. The key is to make the right application to the right lender.

The ‘right’ application is one that makes you look like an acceptable risk, which might include things like improving your credit score, increasing your savings rate and accumulating a bigger deposit.

The ‘right’ lender is one that deals with borrowers like you. For example, while some car loan lenders only deal with good credit borrowers, there are others that specialise in bad credit or poor credit borrowers.

What is a loan-to-value ratio?

The loan-to-value ratio, or LVR, is a percentage that expresses the amount of money owed on the car compared to the value of the car. For example, if you take out a $15,000 loan to buy a $20,000 car, you have a loan-to-value ratio of 75 per cent. Loan-to-value ratios change over time as you pay off your loan and your car depreciates in value. For example, two years later you might now owe $10,000 on your car, which might now be worth $15,000. In that case, although there would still be a $5,000 difference between the size of the outstanding loan and the value of the car, the loan-to-value ratio would now be 67 per cent.

Can I get a car loan with bad credit?

Yes, you can get a car loan with bad credit, although you’ll probably find the process trickier and dearer than that experienced by people who have good credit histories.

You can find a number of lenders that specialise in bad credit car loans. However, make sure you compare bad credit car loans before you sign on the dotted line, because not all car loans are alike and having bad credit may mean you are more likely to be hit with higher fees and interest rates.

If you have bad credit, it’s important not to take out a car loan unless you can afford the repayments because a default could further damage your credit rating. Conversely, if you make all the repayments and repay the loan successfully, your credit rating might improve.