It can be hard getting loans if you're unemployed on Centrelink. But there are options even if most of your income comes from Centrelink benefits. Be careful though, as these loans could be more expensive than normal. Keep in mind you might also be eligible for Government and community financial assistance schemes that offer loans with no or low interest, which tend to be more favourable.
Are you struggling financially?
If you're struggling financially and would like to speak to someone for free financial advice, information and assistance you can call the Financial Counsellors hotline on 1800 007 007 (open from 9:30am to 4pm, Monday to Friday). If you are suffering financial problems related to the coronavirus pandemic you may be eligible for additional support.
⚠️ Warning about Borrowing
Do you really need a loan today?*
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
- For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
- Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
- If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94
The Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.
* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.
Loan options for Centrelink customers
Things to consider when making a Centrelink loan application
- Eligibility. Check the minimum eligibility criteria listed on Finder's review pages before you start filling out application forms. If the minimum eligibility is met, applications can be made. However, it's important to remember that this doesn't guarantee approval for the loan.
- "Centrelink accepted". If this isn't on a lender's site, this doesn't mean it won't accept government benefits as income. Check directly with the lender to find out if applicants must be employed or if it explicitly states that those on Centrelink are unable to apply.
- Get in contact directly. Get in touch with the potential lender to discuss eligibility. An alternative is to call your current bank to check if that will approve loans for people on Centrelink.
- Work out if you can afford it. Before applying check how much the loan will cost including the comparison rate plus any establishment fees or late payment fees.
What loan options are there for people on Centrelink?
Click on the links below to see the range of lenders, products and eligibility requirements.
|Cash Converters||Loan repayments cannot exceed 20% of the gross income.|
|Cash Stop||Accepts applications from those on Centrelink payments including Newstart or Youth Allowance.|
|Cash Train||Applicants must work full-time or part-time to qualify.|
|ClearCash||Applications are handled on a case-by-case basis.|
|Credit24||Applications considered as long as Centrelink payments are not more than 50% of income.|
|Applicants must be employed and earn more than per month.|
|Good to Go Loans||Applications are handled on a case-by-case basis.|
|MoneyMe||Applicants need to be employed.|
|Nimble||No more than 50% of the total income can come from Centrelink.|
|Speckle||Minimum gross income of $30,000 annually not inclusive of government benefits. No more than 50% of the total income can come from Centrelink.|
|Rapid Finance||Applications are handled on a case-by-case basis.|
|Sunshine Loans||Applicant's main source of income cannot be from Centrelink.|
What loans can I get on Centrelink?
Personal loans from banks, credit unions and other lenders when the applicant are an option if you're receiving payments from Centrelink. It's important to note that applicants will have to meet a minimum income requirement and not all types of Centrelink income are accepted.
Payday loans are loans with low borrowing amounts and short terms, and are available to Centrelink applicants as well as those with bad credit. Also referred to as cash loans, they are usually for up to $2,000 although sometimes up to $5,000 or more is available. Since these loans are riskier for lenders they are more likely to charge higher interest rates on these types of loans.
A secured car loan might be an option from a lender that accepts Centrelink applicants. Applicants can purchase a new or used car and use it as security for the loan to get a lower rate.
Overdrafts are a type of credit provided by banks, and are linked to your bank account. It allows you to spend more than what is currently in your account, to a certain limit, and Centrelink recipients may be eligible depending on which bank they use. Interest will be charged on the amount drawn.
How to calculate how much you can borrow
To work out if you're eligible for a Centrelink loan, look at your most recent Centrelink statement to determine the annual income (you can work this out by multiplying the payment amount by 26 as payments are received every fortnight). Remember to include any other sources of regular income or income from any co-borrowers.
Which Centrelink benefits make me eligible for a personal loan?
It can be easier to be approved for a Centrelink loan when receiving certain types of Centrelink payments over others. For instance, Youth Allowance is a common payment that is not accepted by lenders as a form of income. The first step to applying for a Centrelink loan is to identify what type of Centrelink benefit you receive, which can be done by looking at documents provided by Centrelink. Here is a breakdown of the Centrelink payments that are available and whether they are generally accepted by lenders:
|Age Pension||This provides monetary support for the retired. Many payday lenders accept this as a form of income while banks may require supplementary income.|
|Carer's Allowance||For people who are caring for a dependent person, this allowance provides monetary support. This is generally accepted as a form of income by lenders.|
|Youth Allowance||Young people aged 16 to 24 who are studying, undertaking an apprenticeship, training, looking for work or sick can be eligible for youth allowance. Many lenders do not accept this as a form of income although some payday lenders will.|
|Austudy||This is for full-time students and Australian apprentices 25 years or older. It can be difficult to get a loan when receiving this payment.|
|Foster Care Allowances||This is a fortnightly payment intended to help support and pay for carers with a foster child. This can be considered as part of an income but a supplementary income will be required in addition to this allowance.|
|Disability Pension||People who have a physical, intellectual or psychiatric condition that stops them from working can be eligible for the Disability Support Pension. While this is generally accepted, some lenders will not accept this as a form of income.|
|Child Support Payments||This is income received to help cover the cost of raising a child or children. It can be assessed income if the applicant can provide a copy of the Family Law Court Order, bank statements proving they receive this income, a letter from a solicitor and a letter from the Child Support Agency (CSA).|
|Family Tax Benefits and Parenting Payments||This is financial support to help cover the costs of raising children. Family Tax Benefits Part A and B are generally accepted by lenders but having supplementary income will help. The age of the children will also be taken into consideration.|
|Overseas Pension||For people who receive a pension payment from overseas, some lenders may recognise it as income. This is generally if the pension is coming from Austria, Belgium, Canada, Chile, Croatia, Cyprus, Denmark, Finland, Germany, Greece, Ireland, Italy, Japan, Korea Republic, Malta, Netherlands, New Zealand, Norway, Poland, Portugal, Slovenia, Spain, Switzerland or the USA. Applicants might be required to show that the pension is ongoing for a period of time.|
|JobSeeker Payment||This income is to support people financially while they're looking for work or are unable to work temporarily due to illness or injury. A small number of payday lenders offer loans to borrowers receiving JobSeeker payments.|
For those who are receiving Centrelink payments and looking for a loan, it's important to consider all the options available before making a decision.
Remember that applying for multiple loans at once can hurt your credit history making it harder to get approved for loans in the future.
What to weigh up: The pros and cons of a Centrelink loan
- Cover your needs more quickly. Rather than painstakingly saving up, you can pay for what you need more quickly with the help of a loan.
- Make repayments over time. Getting a loan to cover a cost breaks up the payment for the thing(s) you need over time. Not paying for an expense (particularly a larger one) all at once can be easier on your budget, particularly if you are having to be careful with your money month to month.
- More interest-free/low-interest options available to you. Being on a lower income means that you are more likely to qualify for no interest or low-interest loans that are offered by not-for-profits and other organisations.
- Difficulty being approved for traditional loans. If you're on Centrelink, you're generally less likely to be approved for most traditional loans than someone on a higher income. This is particularly the case if Centrelink makes up more than 50% of your total income.
- Difficulty meeting repayments. It may be difficult to factor loan repayments into an already stretched budget. This is especially true when it comes to personal loans or payday loans, which have higher interest rates and fees than loans offered by not-for-profit institutions.
- Getting trapped in a debt cycle. Getting into debt is risky for anyone, as it can lead to further debt if you fail to make payments on time. If you are ever unable to make a loan repayment, it's crucial to contact your lender ahead of time to let them know.
How to apply for a loan while on Centrelink payments
To apply for a loan while on Centrelink payments, it's important that you first check whether or not you are eligible for the loan in question prior to submitting an application, as this will differ from loan product to loan product. The application process will also differ, depending on which type of loan you are opting for. Most applications can be done 100% online.
For non-government and community assistance options, you will need to have the minimum of:
- Proof that you are aged 18 or over and an Australian citizen/permanent resident.
- A regular income that makes up more than half of your Centrelink income.
- Evidence that the loan repayments do not exceed 20% of your gross income.
For the following government and community assisted options, you will need:
Pension Loans Scheme
Steps to apply:
- Sign in to myGov and go to Centrelink.
- Select Payments and Claims from the menu, then Claims, then Make a claim.
- Under Seniors select Get started.
- Select Apply for a loan under the Pension Loans Scheme.
- Answer all the questions. Each screen has information to help you complete the application. This includes how to submit your supporting documents and any other forms you need to complete.
- Submit your application.
- Proof of age and identity (and details of your partner's identity, if applicable)
- Your bank account details
- Your tax file number
- Proof of Australian residence, if you've lived outside Australia
- Proof of whether you're a member of a couple
Steps to apply:
- Send your enquiry to StepUP.
- Complete paperwork sent by your StepUP Microfinance worker.
- Bring your paperwork to an interview with your worker.
- Your application will be sent to NAB for assessment, which includes a credit check.
- If approved, you'll need to visit your local NAB branch to sign your loan contract. You will either receive a cheque made out to the supplier, or the supplier will be paid via EFT. If your application is declined, you will receive a call from your StepUP Microfinance Worker and a letter from NAB.
- Have a Health Care Card/Pension Card, or receive Family Tax Benefit A
- Reside in your current premises for more than 3 months
(This and other eligibility criteria will be discussed by the Microfinance Worker when you enquire.)
Supplementary income. Income from a full-time or part-time job. This also includes income that may be earned by a partner or joint applicant.
Taxable income. Income that will need to have tax paid on it, after the recipient has deducted all expenses that can be claimed.
Frequently asked questions about Centrelink loans