Life can be tough as a single parent. You’ve got to do everything and be everywhere at once. Many single parents find it’s vital to have a car to meet the ever-mounting demands of family life. Here’s what you need to know if you’re in the market for a single parent car loan.  

What car loans are available to single parents?

If you depend on a single income it can be difficult to meet the financial requirements that some lenders set. Relying on one income can make being accepted for a car loan tricky, particularly if you’re employed part-time or your income is subsidised by Centrelink payments or Parenting Payment Single (PPS). 

Luckily, there are car loan options available to you if you are a single parent.  

  1. Secured car loans: there’s less risk to a lender when you secure the loan against an asset - usually the car itself. Keep in mind you will likely need to have regular income and good credit to be approved.
  2. Low-doc car loans: this loan type is ideal if you are self-employed and work from home, especially if you’re also taking care of children full-time. 
  3. Guarantor car loans: if you have a family member or a friend with good credit, this is another option. There is less risk to the lender isomeone supports your loan application.
  4. Centrelink accepted loans: if you are already receiving income suppport from Centrelink and have a regular income, you may be eligible for a loan from some lenders. Check the eligibility criteria to see if they say Centrelink accepted
  5. Charitable organisations: some charitable organisations partner with banks to provide finance for single parents and families on low incomes for a range of purposes. 

Why might a single parent struggle to get a car loan? 

Unfortunately, some single parents find it tricky to get car loans.  

This is because single parents may be: 

  • Reliant on a sole income 
  • Working part-time to care for their children 
  • On PPS (Parenting Payment Single, also known as parenting pension payments)
  • In debt, or have bad credit history 

Relying on credit cards, Centrelink and PPS payments is a necessity for many single parents and these often result in bad credit history. According to ACOSS (Australian Council of Social Service) “less than half of sole parents on social security payments get child support from their former partners”. 

Who can help me get a car loan as a single parent?

It might be cliché, but the best person to help you in your car loan journey is yourself. Doing your own research is the best way to find the right car loan for you. Comparison tools, such as tables and calculators, can help you find car loans that suit your needs. 

A comparison table can help you to compare rates, fees and features involved with some of the loan types mentioned here. For example, you can check the criteria of one secured loan against another to find the loan with an income threshold that matches yours. Car loan calculators show you how much you would need for repayments. This is very helpful when you’re independently managing the family budget.  

Single parents can also benefit from getting in touch with a car finance broker. Brokers are likely to have knowledge and access to options that are suited to their needs. 

There are two main advantages to using a broker: 

  1. Generally, finance brokers don’t charge for their services, as they receive commission payments from lenders, and
  2. If you approach lenders directly, they will only recommend their own products. A broker can recommend car loans from a range of lenders and find the best deal for your circumstances.   

Finance brokers are qualified professionals who are required to follow the National Credit Code and to observe responsible lending practices. 

Can I get an unsecured car loan as a single parent? 

Lenders generally are reluctant to lend out large sums of money. This means single parents with lower earnings may only be accepted for a loan to buy a cheaper, second-hand vehicle rather than to bua new car. However, some lenders won’t allow used cars to be used as security for a secured loan, meaning an unsecured loan might be your only option 

The downside to an unsecured car loan is that you typically pay higher interest rates compared to a secured loan given increaserisk to the lender. While you may pay less for the vehicle, you may need to pay to more for the loan, or greater interest costs. 

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What documentation do single parents need for a car loan?

If you’re applying for a car loan, you’ll need the following: 

  • Personal identification (eg driver’s licence or passport) 
  • Proof of income (including Centrelink or Parenting Payment Single - PPS) 
  • Copies of bank statements and bills 
  • Information on any debts you have (eg credit cards) 
  • Information about the car you want to buy 

The key difference for single parents involves documentation. It is crucial that, if you’re on Centrelink payments, you choose a car loan that allows for this to be considered as income. You should also check the minimum income you need to be eligible for the car loan. This is typically around $15,000 to $20,000 a year 

Can I get a car loan on Centrelink payments? 

Lenders can consider your employment status a sign of how likely you are to meet loan repayments. If you receive Centrelink or PPS payments, there are some factors that may improve your chances of receiving approval on a loan.

  • Having a part-time job 
  • Being an Australian resident 
  • Having income or benefits worth more than $400 a week 


Are there banks that specialise in single parent car loans?

While there aren’t any lenders who specifically focus on single parents, there are plenty who lend tless creditworthy borrowers. Single parents may find smaller lenders are more helpful than the big banks can be more helpfulIf you’ve found a smaller lender you think might suit, ask whether they will lend to someone in your financial situation.  

It’s important you’re confident that you’ll be approved for a car loan before you apply since rejection can negatively impact your credit score. If your credit history is a concern, you could consider bad credit specialist lenders for a loan. Keep in mind that their interest rates will likely be higher than if you have a good credit rating.  

What about single parents with bad credit? 

There are a number of lenders who specialise in bad-credit car finance. If you’re struggling for loan approval as a single parent because of your credit history, these may be an option.  But bad-credit car loans often come at higher interest rates. When supporting a family on your own, you may struggle to meet the high interest costs.   

Think carefully too about whether you can afford the repayments on a car loan. If you don’t think you can keep up, you may want to reconsider. Use our car loan calculator to see what your repayments might be. 

Improving your credit score:

Consider improving your credit before applying for financial products. This will probably make it easier to receive approval on a car loan. Here are nine ways to improve your credit score.  

Frequently asked questions

Can you get a car loan as a single mum?

Getting a car loan can be tricky if you’re a single mum, but it’s not impossible. Juggling your finances can be difficult, particularly if you are reliant on a sole income or on Centrelink payments (or a combination of the two), and having a car is a necessity rather than a luxury for many who have to look after children. Luckily there are specialist providers and services that can help you get the loan you’re after, even if you’re in a tough spot financially.

How much can I get towards a new car as a single parent?

It really depends on your financial circumstances as to how much a lender will grant you towards a new car as a single parent. With most lenders, the smaller the loan you apply for, the higher your chances are of approval, so getting a cheaper car or adding some savings of your own, may be a valid option if you are struggling for approval on a car loan.

How much can I get towards a new car as a single parent?

It really depends on your financial circumstances as to how much a lender will grant you towards a new car as a single parent. With most lenders, the smaller the loan you apply for, the higher your chances are of approval, so getting a cheaper car or adding some savings of your own, may be a valid option if you are struggling for approval on a car loan.

Where can I find car loans for single mothers?

Single mothers can sometimes find that due to their circumstances the bigger banks can be less inclined to lend to them, but there are smaller companies and specialist lenders who can be willing to provide loans to people in a range of circumstances.

Single mothers could benefit from getting in touch with a car finance broker, as a broker is likely to have knowledge and access to options that are suited to their needs.

Advantages to using a broker:

  • Finance brokers often don’t charge for their services as they work on a commission basis from lenders.
  • Brokers will have industry knowledge and contacts within lending companies and is therefore more likely to be able to find the best deal for your circumstances.
  • Brokers are qualified professionals who are licensed under the National Consumer Credit Protection Act so have an obligation to follow responsible lending practices and to work in your best interests.

Find car finance through a broker.

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.

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.

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.

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.

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.

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.

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 a bad credit car loan?

A bad credit car loan is a car loan for borrowers who have ‘bad credit’ or a bad credit history.

Some lenders refuse to offer bad credit car loans, because they believe there is an excessive risk that bad credit borrowers will not repay their loans. However, other lenders are willing to provide bad credit car loans.

Generally, these lenders charge higher interest rates for bad credit car loans than ‘prime’ car loans, reflecting the higher level of risk. Bad credit car loans may also have higher fees than prime car loans.

However, the big advantage of a bad credit car loan is that it allows borrowers with bad credit to access finance. Another advantage is that it could help bad credit borrowers improve their credit rating, assuming they make all their repayments on time.

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.

Do I need good credit to get a car loan?

You don’t need good credit to get a car loan, although the worse your credit history, the harder and more expensive it’s likely to be.

Some lenders will do business only with borrowers who have good credit. However, there are other lenders that are willing to offer car loans to borrowers who don’t have good credit. The catch, though, is that they may charge higher interest rates and fees, and also require more paperwork.

If you don’t have good credit and want a car loan immediately, you can search for lenders that work with bad credit borrowers. If you are able to wait, you can work to improve your credit score and then apply for a car loan once you have good credit.

Can I get a no credit check car loan?

You may be able to get a no credit check car loan in certain circumstances, although it’s important to weigh up your options before doing so.

Most lenders refuse to provide no credit check car loans, because they don’t want to give loans to borrowers without first confirming that they have a track record of repaying debts. So any lenders that do provide no credit check car loans would take measures to protect themselves against the risk of default.

That’s why no credit check car loans have higher interest rates than other car loans. Also, borrowers often have to provide security and put down a larger deposit.

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.

Who provides bad credit car loans?

Lenders that provide bad credit car loans tend to be smaller challenger lenders rather than the bigger banks.

Bad credit car loans are a niche product. The bigger banks tend to focus on mainstream car loan finance for borrowers with better credit histories. That’s why smaller lenders tend to be the ones that provide bad credit car loans.

Bad credit car loans can have high interest rates and fees, so it’s important to compare options before submitting an application.

Where can I find lenders who offer no credit check car loans?

There are companies that claim to offer no credit check car loans. However, you may find that companies that offer no credit check car loans have high fees and high interest rates.

You might be better off finding a specialist lender who will look at your credit history and income, who will decide whether or not you are able to responsibility pay back the loan. Alternatively, you could contact a car finance broker.

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.