Compare car loans for pensioners

Worried that your pension is going to hold you back from getting a car loan? RateCity is here to help make the best financial decisions for your circumstances - Data last updated on 19 May 2019

Compare pensioners car loans

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Car loans for pensioners

People receiving a pension may wonder if they are eligible to apply for and be offered a car loan. If you're in this position, there is no reason not to explore your options, and many lenders will assess your financial circumstances to examine your eligibility. Car loans for pensioners are personal loans, and when assessing your situation, lenders will look at all your financial details, including your credit history, the value of your assets (including your home, if you own one) and what type of pension you receive. Pensioners with assets can be quite an attractive prospect for a lender, as a car loan could be secured on a home.


Can I get a car loan on a pension?

Yes. If you are receiving an aged or disability pension/DSP, Centrelink payments, parenting payment single/PPS, partnered parenting payments/PPP, or carer’s pension, there may still be options available to you when it comes to getting a car loan. Here at RateCity we try our best to outline the information that could help you make the best financial decisions possible, and potentially get you closer to an affordable car loan, even if you have bad credit.

Can I get a car loan if I’m retired?

 Yes. Your options will be more limited than those of someone who is in employment, but as long as you have a form of income from aged pension, carer’s income, disability payments or Centrelink payments, it is possible to get a car loan.

Things to consider before looking for a car loan if you are on a pension

Are you a homeowner?

  • You are more likely to be accepted for a car loan if you have property that can secure the loan and reduce the risk to the lender.

How much do you need to borrow?

  • Lenders are more likely to lend to you in the case of smaller amounts.
  • Assess whether you have any savings that you can put towards your purchase.
  • Borrowing less will mean less to repay, and therefore less cost to you in interest payments.

How much is your income?

  • Even if you are not in employment, your pension payments will still be looked at by a lender as income.
  • Lenders will take your income into account in order to assess whether you can meet the repayments of a car loan.
  • This will affect the interest rate that you are offered.

How much are your outgoings?

  • Look at your income against your outgoings and be honest with yourself about how much you can afford to repay.
  • Assess your budget capabilities yourself prior to making any applications to check that repaying a loan is feasible.

What sort of vehicle do you require?

Do you really need a car?

  • You may need a car for daily use and find that owning a car is cheaper than living without one.
  • You might find on assessment that owning a car isn’t in fact necessary to your lifestyle.

How do car loans for pensioners work?

A personal loan works the same way for pensioners as for anyone else, in that you borrow an amount of money to pay for your car, and then repay that amount with interest over a number of months or years. One to five years is usual, but you could get up to seven years depending on the lender and the amount you want to borrow. Putting down a deposit or trading in an older car will reduce the principal sum you’ll be loaned, and consequently reduce the repayments. Interest rates will vary, so you should make comparisons between lendersa loan comparison calculator is a handy online tool.

Can I get a car loan on Centrelink payments?

Yes. If Centrelink payments are your main source of income, getting a loan for a car can seem like an uphill struggle. However, there are still lenders who could be happy to lend to you. While the big four banks might not be willing to provide you with a loan if you are not in employment, smaller lenders and credit unions, as well as specialist lenders, tend to be more accommodating.

If you are on Centrelink payments, try to check the minimum income eligibility on the loan that you are looking to apply for. Applying for loans and being rejected will negatively impact your credit score, so be sure that you meet the requirements set out by the lender.

It may be advisable to try getting in touch with the lender directly before putting in an application.

You may even be able to receive a short-term advance on your Centrelink payments, providing that the amount you need to borrow for the car is low. This will be assessed on a case-by-case basis.

Can I get a pensioner car loan with bad credit?

Yes. While having bad credit and being on a pension limits your options, there are lenders who potentially will lend to you. There are also many lenders who specialise in bad credit car finance. Having bad credit means that applying for any loan is more difficult to do, and it tends to mean that the interest rates you will face will be higher.

Things to compare when applying for bad credit finance include: 

  • Secured and unsecured loans car loans tend to be secured against the vehicle, but if you are purchasing a used car you might require an unsecured car loan, or to secure the loan against your property. Secured loans tend to have lower interest rates than unsecured loans, but is it worth risking your home or your car if you don’t meet the repayments?
  • Interest rates – look at what interest rates are available to you with your current credit score. Do the repayments fit in with your current budget? With RateCity you can calculate repayments easily with our car loan calculator.
  • Fees – look at the fees that are attached to car loans. Are there any upfront or ongoing fees? Some loans may offer a lower interest rate but with fees that could end up making the loan more expensive. Also keep an eye out for early exit penalty fees. You don’t want to be caught out should you decide to pay off the loan early.

Final thoughts on car loans for pensioners

It is important to really weigh up your options and compare car loans in order to find the best possible outcome for your circumstances. Be realistic about what you can afford when looking at car finance and assess how necessary a car purchase really is for you.

For some people though, a car really is a necessity. If you have bad credit and are struggling financially there are other options. You can look into Microfinance from Good Shepherd Finance. Partnered with NAB they provide StepUP loans of between $800 to $3000 for people on low incomes for various expenses, including cars. You may find that this sort of loan is the most affordable for your circumstances.

You can also contact the free National Debt Helpline, on 1800 007 007 for further advice.



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.


^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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