Centrelink Loans for Car Repairs

It’s an undeniable truth that car repairs can get expensive. Whether you blew a tyre or got into a car accident, you’ll need some serious capital to get your car back on the road. 

Now, unfortunately, not everyone has money saved for a rainy day. And that’s where car repair loans come into play. 

But, what if you’re on Centrelink benefits? Will money lenders be willing to give you the money you need? Let’s find out, shall we? 

What this article covers:

centrelink loans for car repairs

Yes, but it’ll probably take you a while to find a money lender who’ll approve your loan application. 

Typically, money lenders won’t approve clients if part or all of their income comes from Centrelink benefits. That’s because they fear a lower income won’t enable you to pay back your loan easily. 

Still, some money lenders can make an exception. They may accept clients with a Centrelink income equal to or greater than $480 to $500 per week. Some money lenders accept even less (after studying your overall financial situation).

So, don’t lose hope if you can’t get a loan on the first try. Keep asking, and you’ll hopefully find someone to lend you the money. If not, there are other methods you can try to get the money that we’ll cover later on.

What Documents Do You Need to Supply When Applying for a Car Repair Loan?

The same documents you’d supply when asking for any loan, i.e., your personal information, address, contact details, employment details, and proof of income.

You’ll also be asked to provide three months’ worth of bank statements, entailing your income and regular expenses. Finally, you’ll be asked to verify your driving license, though not all lenders will ask for this. 

What Type of Loan is a Car Repair Loan?

Generally, a car repair loan is considered one type of personal loan.

Now, personal loans can be secured or unsecured. 

A secured loan is when you’re able to borrow money by putting up a valuable asset as collateral. Accordingly, if you ever default on the loan, the lenders can sell your asset to get back part or all of their money. So, since lenders are pretty much guaranteed to get their money back, they tend to offer larger loans with better interest rates.

On the other hand, unsecured loans pose a risk for lenders. As such, they don’t offer as much money, and their fees/interest rates tend to be much higher. Moreover, the repayment time tends to be shorter. 

So, which type of personal loan is a car repair loan?

It can be either. If you only need a small amount, say in the range of $500-$2000, then you may be able to get an unsecured loan. However, if your repairs cost more than this, then your lender will ask you to provide an asset as collateral, which will most likely be your car. 

car repair loans centrelink

If you don’t need too much money, then you may be able to find some leaders who offer unsecured personal loans, even if you’re on Centrelink benefits. 

However, if your repairs are costly (>$5000), an unsecured loan will be too risky for the lender.

That being so, most, if not all, money lenders will ask that you put your car up as security if you receive Centrelink payments and require a large loan. 

Car loan amounts vary from one lender to another. 

Some cap off car repair loans at $5000. Some offer a maximum of $10,000, while others can offer $15,000. You may even find a money lender who can allow you to borrow up to $30,000. 

Still, you should keep in mind that the bigger the loan, the harder it’ll be to get approved. 

Typically, if 50–100% of your income comes from Centrelink benefits, most money lenders won’t go over the $10,000 mark, especially for first-time customers. Thankfully, though, car repairs don’t usually cost more than that. So, a $10,000 loan will almost always be more than enough. 

Can You Get a Car Repair Loan With Bad Credit?

Thankfully, it’s not impossible to get a car repair loan if you have bad credit. 

Some money lenders will be willing to overlook bad credit, and some won’t even check your credit score at all. However, they won’t give a loan to every client with bad credit.

They must first ensure that their client will be able to repay the loan without extreme difficulty. That means going over your income, expenses, Centrelink payments — everything. 

Conversely, they may look for a way to minimise the potential risk. For instance, they’ll either offer you a loan with incredibly high fees and interest rates or ask you to provide a valuable security, equal in worth or more valuable than the loan amount. 

Can You Use a Car Repair Loan to Fix Other Vehicles? 

car repair loan centrelink

Absolutely. It doesn’t matter if you drive a car, motorcycle, or motorhome. As long as your purpose is to repair a mode of transportation, money lenders don’t care about your choice of vehicle. 

As such, the application process will be the same, whether it’s for repairing a car or a bike. Still, the lender may ask you to specify what type of vehicle you drive. That’s because they may require it as security against the loan. 

Eligibility Criteria for a Car Repair Loan

In Australia, the eligibility criteria for any type of loan are essentially the same. 

In short, you should: 

  • Be over 18 years of age
  • Be an Australian citizen or a permanent resident of Australia
  • Have an active bank account, email, and phone number
  • Earn a regular income for at least three months (from Centrelink or otherwise)

How to Apply for a Car Repair Loan

If your circumstances prevent you from asking the bank for a loan, a private money lender will be your only option.

Now, the problem with private money lenders is that they’re not all trustworthy. Some charge their clients ridiculous fees, and the borrowers are none the wiser. 

As such, many people are afraid of using their services. However, by using a service like Orange Loans, you can get in touch with trustworthy lenders who are willing to work with all sorts of people. 

Simply by filling out an application, we’ll hook you up with a trustworthy lender willing to loan you the money. From there, it’s just a matter of you and the lender coming to an agreement on your loan terms. Once this happens, you’ll get your money by the end of the day, if not sooner. 

How Much Does a car repair loan Centrelink Cost?

It honestly depends on how much money you need.

For instance, say you need a loan that’s $2,000 or less. For such a small sum, the Australian Securities & Investments Commission (ASIC) states that lenders can’t charge more than 4% of the loan as a monthly fee and more than 20% as an establishment fee. 

centrelink car repair loans

So, if you took out a loan for $1000 to be repaid in a month, you’d pay:

  • Establishment fee: $200
  • Monthly fee: $80
  • Total: $1,280.00

Still, keep in mind that the total may increase if you incur late payment fees. And, of course, if you default on the loan, you’ll be asked to pay the default fee, which can be up to double the original loan. 

If you think about it, it isn’t too bad of a deal. The fees are fixed, and there are no interest rates. So, as long as you make your payments on time, there won’t be any problems.

But, what about a bigger loan? How much would that cost? Well, this will mostly depend on how good of an interest rate you can find.

Typically, most interest rates start at 5% and end all the way up at 20%. As you can see, there’s a huge discrepancy. So, what can you do to get an interest rate on the lower end? Simply, get a secured loan.

When you put something up as collateral, money lenders tend to set a lower interest rate. They even give you longer repayment terms (though this can be a double-edged sword if it goes on for too long). 

So, when offered a choice between a secured and unsecured loan, always choose secured. 

What Should You Do If You’re Struggling With Repayments?

If you can’t make your payment on time, the first thing you need to do is contact your lender and explain the situation. 

There’s a chance your lender will take your circumstances into account and give you more favourable loan terms. For instance, they may decrease this month’s payment or give you more time to pay. 

If you don’t contact the lender, they’ll simply issue you a warning for the late payment and wait. If you don’t repay the loan, they’ll seize your asset and sell it to make back their money. 

But what if your loan isn’t secured? In that case, expect legal repercussions and a significant drop in your credit score. 

Other Methods of Getting Money for Car Repairs

centrelink loans for car repair

Some people are scared of dealing with private lenders. Some may simply be unable to find lenders willing to work with them due to being on Centrelink. If that’s you, here are a couple of different ways you can borrow money for your car repair:

No-Interest Loan 

As the name states, this loan comes with no interest, no fees, no hidden charges, and, best of all, no credit checks. Simply pay back what you borrowed over 12-18 months, and you’ll be done.

This is all thanks to the “No Interest Loans Scheme” in Australia. With it, people can borrow up to $1500 for essential purchases, and car repairs definitely fall within that category.

However, to qualify for a no-interest loan, you need to:

  • Have a Health Care Card
  • Have a Pensioner Concession Card 
  • Make an income of $45,000 per year after tax 

Centrelink Advance Payment

Anyone on Centrelink benefits can apply for an advance payment through the Service Australia website. 

There are no fees, interest rates, or repayments. You just receive your Centrelink payment in advance and use it to repair your car. Still, keep in mind that you’ll need to find another way to pay for your essential purchases in the coming weeks. 

Conclusion 

Getting a car repair loan while on Centrelink benefits isn’t impossible. You just need to look a bit harder to find a lender willing to accept your situation.

Keep in mind that you’ll probably be asked to put your car up as security. That’s especially true if all your income is based on Centrelink benefits or if you ask for a big loan. 

You may be able to find an unsecured car repair loan if you don’t need too much money. However, if you qualify for a no-interest loan, you’ll be better off with it than with a car repair loan.

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