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.