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.
Retired? Click here to see your loan options
Loan options for retirees
Some of the brands that consider pensioners for a loan
|Brand||Can pensioners apply?||What conditions are there?|
|Cash Converters||Your loan repayments cannot exceed 20% of your income from the pension.|
|Cash Stop||You're able to apply.|
|ClearCash||You're able to apply, applications are handled on a case-by-case basis.|
|Credit24||At least 50% of your income needs to come from outside of Centrelink payments.|
|Ferratum Loans||You need to earn 50% of your income from outside of Centrelink payments.|
|Good to Go Loans||You're able to apply, applications are handled on a case-by-case basis.|
|Nimble||You need to be employed and your primary source of income can't be from Centrelink.|
|Rapid Finance||You're able to apply, applications are handled on a case-by-case basis.|
Banks that may consider you for a loan
What finance options do I have as a pensioner?
Lenders take into account the borrower's income as an indicator of their ability to repay the loan. As a pensioner, this can be problematic as you no longer earn an income. This means that your loan options may be limited compared to when you were employed.
But there are loans you can apply for, depending on your financial situation and your pension. There are also government-assisted schemes and community financial-assistance programs. Some of these loans feature no or low interest rates and may be easier to pay back.
How much can I borrow as a pensioner?
Depending on the loan you apply for, you may be able to borrow up to $3,000. However, most traditional lenders cap it at $2,000. You may be able to get a bigger loan if you have savings, assets and a good relationship with your bank.
Will I be eligible for a bank loan as a pensioner?
Banks have a strict lending criteria. This is because banks are regulated by both ASIC and APRA and so have limitations on who they can lend to. Most banks, for instance, will not consider bad credit applicants. However, they do consider pensioners, although you may not be able to borrow as much as if you were employed. Depending on the bank, there may also be a minimum income threshold. If you have a good relationship with your bank, your chances of approval may increase. The table above includes a breakdown of banks that lend to pensioners and their conditions.
What loans can I apply for as a pensioner?
There are several loans you may be eligible for, including loans with low documentation requirements. You can apply for the following loans:
- Loans from your current bank. If you have a good history with your bank or credit union, this may be a good place to start. As you already have an existing relationship with them, it may be easier to be approved for a loan. You can visit in-branch to find out what loans may be available to you.
- Low doc personal loans. These loans are designed for self-employed applicants or for borrowers whose income is tied up in investments. Low doc personal loans don't require as much documentation and are generally easier to apply. They are also approved faster. As these types of loans are more risky for the lender, they tend to be more expensive. Lenders usually charge higher interest rates. If you are using an asset as security, you may only be able to borrow up to 80% of the property price.
- Short term loans. These loans are also known as payday loans. They are small loans that come with short repayment terms. You can usually borrow between $100 and $2,000 for a period of 16 days to 1 year. The lender will look at your income and expenses as an indicator of your ability to repay the loan. There are many pros and cons to consider with short term loans. The application process is fast. You could potentially receive the money within hours or a day of applying. However, they are generally more expensive. They also come with higher fees and shorter repayment periods than standard personal loans. There may also be many extra charges, adding to the cost of this loan. It is also easier to fall into a debt trap with this type of loan.
- Bank loans. Some banks consider applicants receiving disability or age pension. You may have to meet a minimum income threshold to be eligible.
- Loans for retirees. These loans are specifically designed for people who receive age pensions, are self-funded retirees or pensioners. Learn more by reading our guide on loans for retired people.
- Bad credit loans for pensioners. You may still be eligible for loans if you're a pensioner with a bad credit history. However, these loans can be expensive. This is because lenders usually charge higher establishment and monthly fees. There may also be costly penalties for late payments.
What should I watch for with payday loans?
Before you apply for a payday loan, you need to keep an eye out for the following:
- Disreputable lenders. Check the lender's website and make sure it's a reputable company. There have been many cases where scammers have pretended to be a loan provider. You should check if they are licensed with ASIC. They should also be easy to contact.
- High interest rates and fees. Payday loans of $2,000 or less do not include an interest fee. Rather, they have a hefty fee to cover the cost of borrowing. There are also fees for late payments. These fees are regulated by ASIC and it's illegal for lenders to charge more.
- Multiple applications. Every loan application shows up on credit reports. Some payday lenders may not consider your credit history. But several applications within a short period can have a negative impact on your credit score.
- Unaffordable repayments. You should consider how much your repayments cost and whether you can afford them. You should also ask yourself if you can pay the loan within the repayment window. Most of these loans come with short repayment terms, so include that in your calculations. You should ensure the loan is repaid within the loan term. If you wish to extend your loan term, keep in mind that extra fees will apply.
- Long-term repercussions and legal issues. Once you sign a loan agreement, you are bound to its conditions. You will have to pay the loan and all the fees and payments. Typically, these are unsecured loans. This means that the lender can initiate legal proceedings against you if you do not repay the loan.
What government assistance schemes can I apply for?
The Australian government has established a few support schemes for pensioners. These include the following:
- Pension Loan Schemes. You can apply for this loan if you are of pension age and are eligible or receive an Age Pension. If you own real estate, you could get tax-free fortnightly payments for a short or indefinite period. This loan is secured against the real estate you own and allows you to access extra income. You are taking out a loan against your equity and receiving payments every fortnight. You could get up to 150% of your pension as a loan.
- No Interest Loan Scheme (NILS). This interest-free loan scheme is offered by Good Shepherd Microfinance and is subsidised by the government. It is offered by 170 local community organisations across 600 locations in Australia. These loans let you borrow up to $1,500 with a loan term between 12 to 18 months. As the name suggests, these loans come without interest rates and feature no fees or charges. You will only have to repay the amount you borrowed. You can use this loan to buy essential household items, medical expenses or car repairs. You will need to hold a pension card to be eligible.
- Centrelink Cash Advance. If you receive regular pension payments from Centrelink, you may be able to bring it forward as a cash advance. This is not an additional payment, but an advance on your existing payments. You may be eligible depending on how long you have been with Centrelink, the type of payment you receive and how much you receive.
You can apply for these community financial assistance programs if you are eligible:
- Saver Plus. This is a financial education and matched savings program. It helps families and low-income earners improve their finances by developing savings plans and building assets. Your savings will be matched dollar for dollar, up to $500.
- Good Money. Operating out of Victoria, this community finance hub helps people access no or low interest personal loans, such as NILS. This is to help people purchase household goods. It also helps people better manage their money and improve their finances.
- NAB StepUP program. This program offers low-rate personal loans for amounts between $800 and $3,000. It can be used to buy essential household items. There are no fees and charges with this loan, and the interest rate is fixed.
How can I apply for a pensioner loan?
You can use the table above to find a pensioner loan. You can use it to compare between lenders and see which loan you can apply for. Apart from the interest rate, you should look at the comparison rate. You should also compare between lenders. Also keep an eye out for any additional costs like exit fees or early repayment fees.
Once you've found an option that suits you, you can click "go to site" to begin your application. If you have questions about your eligibility, you should contact the provider directly by phone, online or in-branch. As every loan application gets listed on your credit file, it is best to be certain of your eligibility. Too many applications made within a short period can affect your credit score. This could reduce your ability to get credit in the future.
To make the application process easier, you should keep the following documents handy:
- Proof of identification. You must be able to show proof of age and identity, including that of your partner if applicable.
- Financial Information. This includes your pension payments, bank statements, proof of assets, debts and open credit accounts.
You can still get a loan if you're getting Disability Support Pension (DSP), Carer Allowance or the Age Pension. Although some lenders will need you to have income outside of your pension payments. The maximum loan amount for most pensioners is $2,000.