Fair Loans for Centrelink Customers

Are you experiencing financial hardship? Have your loan applications been rejected? Whether it’s your Centrelink benefit type or low credit score, many factors deem traditional loan options inaccessible. This is where fair loans come in, so let’s learn how fair loans for Centrelink customers can give you a fresh start!

What this article covers:

What Are Fair Loans?

fair loans for centrelink customers

Fair loans are financial products with low interest rates designed for people with bad credit. To illustrate, these loans follow fair lending regulations, which are set by the Equal Credit Opportunity Act (ECOA). These regulations include that lenders can’t discriminate against an applicant due to:

  • Race/colour
  • Origin
  • Religion
  • Sex
  • Marital status
  • Age (as long as you’re able to contract)
  • Exercising their rights under the Consumer Credit Protection Act
  • Income derived from a public assistance program

Accordingly, lenders shouldn’t reject applicants for receiving governmental benefits, which is good news for Centrelink customers.

Another relevant law is that lenders can’t “Vary the terms of credit offered, including the amount, interest rate, duration, or type of loan” due to one of the prohibited grounds for discrimination. To explain, they can’t charge you high interest rates solely because you receive Centrelink benefits.

However, responsible lending regulations apply, so your circumstances must deem you able to repay the loan if you want to qualify for it. In other words, applicants need to have sufficient income and meet other eligibility criteria.

Before You Apply

Don’t rush to fill out an application before checking that you’re eligible. Although your lender will have their specific criteria, general prerequisites are:

  • Be an Australian citizen or permanent resident
  • Be 18 years old or over
  • Have a Centrelink income suitable for the loan amount
  • Have a checking account
  • Have an eligible Centrelink benefit type

Regarding the benefit type, this criterion may seem discriminatory. However, it isn’t because it relates to the stability of your Centrelink income source.

consolidation loans for centrelink recipients

Some benefit types are conditional on an employment or educational position. Accordingly, lenders are reluctant to consider your Centrelink payments a valid main income source because it can stop, leaving you unable to pay back the loan.

To elaborate, these benefit types include Youth Allowance, Newstart Allowance, Abstudy, and Austudy. However, your financial circumstances can make lenders consider your application. As for the benefits that you can get a Centrelink loan for, they are:

  • Carer’s Allowance
  • Age Pension
  • Single Parent Payment
  • Mobility Allowance
  • Centrelink Pensions
  • Child Care Benefit
  • Disability Support Pension
  • Veterans Affairs Pension
  • Jobseeker Payment
  • Partnered Parent Payment
  • Totally & Permanently Incapacitated Pension (T&PI)

How to Apply

Like other online loan applications, we can divide the fair loans application process into three steps:

1. Fill Out the Form

You should fill out the online form, which will only take you a few minutes. You’ll specify the loan amount you need and the repayment term you expect and enter your personal information and required documents, including:

  • Full name
  • Date of birth
  • Relationship status
  • Mobile phone
  • Email address
  • Internet banking credentials
  • Proof of ID, such as a passport or driver’s licence
  • Centrelink documents
  • Bank statements for the 90 days before your application
  • Tax returns for the past two years
  • 100-points of identification
  • Employment details (if you’re employed)

consolidation loan for centrelink recipients

2. Get Matched With a Lender

As soon as we receive your loan application, we start looking for a reputable loan provider who’d be willing to give you the loan you need. They’ll consider your Centrelink payments, additional income sources, spending, outstanding debt, and other financial indicators.

This way, they can determine your eligibility for the loan. We may match you with a lender in as little as a few minutes!

3. Receive Your Cash

Once a loan provider approves your application, we’ll inform you and connect you with them. Then, they’ll send you a loan contract, which you can sign. Read its terms carefully, ensuring that you agree to its amount, repayments, repayment dates, applicable fees, and other terms.

Afterwards, the lender will ask you how you’d like to get the funds, and you’ll receive them the same day or the following day. This can take longer depending on the lender’s process.

How to Increase Your Chances of Acceptance

You’re looking for a loan with low interest and a lender who accepts Centrelink payments. Although that’s difficult to find, you can use the following tips to increase your chances of getting the fair loan you need:

Offer Security

Lenders are more willing to grant applicants secured loans than unsecured ones. After all, it’s risky for loan providers to lend money to an applicant who receives Centrelink payments and has a low income.

Instead, a form of collateral (car, boat, motorbike, or caravan) reduces that risk, as they can repossess the asset if you’re unable to repay the loan. Attaching an asset as security boosts your chances of approval and allows you to negotiate better terms and lower interest.

However, security doesn’t guarantee approval. A lender can’t offer you a loan if they deduce that you won’t be able to repay it. If they do so, they’re setting you up for failure specifically so that they can acquire your asset, which is against fair lending regulations.

Find a Guarantor

A guarantor is a family member or trusted person who’s willing to guarantee you. So, if you fail to make your repayment, they do so on your behalf. This person needs to have good credit and employment. Their presence mitigates the risk for lenders, which allows them to approve your loan application and charge you lower interest rates.

fair loan for centrelink customers

Several financial institution types offer these financial products, and they are:

Services Australia

Services Australia allows Centrelink recipients a cash advance or early transfer on their regular payments or Family Tax Benefit (Partial A) for emergencies. Of course, they must meet the eligibility criteria. When deciding, Services Australia looks at the duration for which you’ve received Centrelink payments and your benefit type. It also requires you to:

  • Live in Australia during the time of application
  • Repay previous cash advances before applying
  • Have the ability to pay back the Centrelink advance in six months
  • Take out no advance payments in the 12 months before applying
  • Be on a low income

Since you’re looking for fair loans, you’ll appreciate the reasonable terms of Centrelink advances. After all, they’re automatically taken from your future payments, which makes for easy repayment. And the government doesn’t charge you any interest.

However, you’ll have to live without your benefit payments until the Centrelink cash advance is repaid. Not to mention, you have to meet the eligibility criteria. Also, you can only borrow small amounts through Centrelink, that being:

  • $1,131 with Family Tax Benefit Part A
  • $446 to $1,339 with Age Pension, Carer Payment, and Disability Support Pension
  • $250 to $500 with Austudy, JobSeeker, Widow, and Youth Allowance payments
  • Six months’ worth of payments with a Mobility Allowance

Banks

As we’ve mentioned, banks are legally prohibited from showing bias against Centrelink customers. However, they generally have strict eligibility criteria. So, they expect massive cash flows, excellent credit scores, healthy credit files, lengthy savings history, and more. Unfortunately, that isn’t the case for many Australian citizens, let alone Centrelink recipients.

However, if you have an income source other than your Centrelink payments and a solid relationship with the bank, you may stand a chance. Bank loans tend to have better terms than others, and you can apply for the following loan types:

Temporary Overdraft

fair loan for centrelink customer

This overdraft is a line of credit that allows you to make transactions after your account balance reaches zero. Instead of getting charged overdraft fees for maxing out your card, you can apply for an overdraft and get access to additional funds (several hundred to thousands of dollars).

The benefits of bank overdrafts include the lack of a repayment deadline and only paying interest on the amount you overdraw.

Personal/Business Loans

If your business needs additional funding, a business loan can help. As for domestic and personal use, you can apply for a personal loan.

Private Lenders

Lenders offer loans for Centrelink customers with more flexible criteria of assessment. Some lenders require you to have an additional income source, while others accept Centrelink payments as the main income source.

Their interest rates and charges are typically higher than other payment options, but their loan amounts tend to be bigger (up to $5,000). That’s because a lender will charge a borrower high interest as compensation for the high risk they’re taking by lending them money despite their bad credit or else.

Still, lenders follow responsible lending regulations, which limit the interest they can charge. It also means they confirm your ability to pay back the loan by looking at your financial circumstances and overall income.

As for your options, they depend on your finances and needs. For instance, you might want a payday loan if you want a small, short term loan and have poor credit. If not, you can opt for a personal loan. Unlike payday loans, these have more flexible repayment terms (ranging from months to years).

There are numerous unexpected expenses that might pop up between your Centrelink payments.

Utility Bills

How do you cover an unusually high bill, whether that’s a phone, water, electricity, or internet bill? You can take out a small cash loan or payday loan.

Maintenance Fees

consolidation loan for centrelink recipient

You can’t exactly plan for when your stove won’t heat up or the hot water doesn’t run. But you can apply for an emergency loan for Centrelink customers to get them fixed.

Vehicle Expenses

Your car breaking down may be a serious inconvenience. If your Centrelink payments aren’t sufficient to fix your car and cover your regular expenses, you can get a Centrelink loan. It can also help with paying fines and getting replacement parts.

Medical Bills

Getting the proper medical care is a necessity, but how can you afford it? You may get charged emergency medical bills, optical bills, specialist bills, or medical accommodation, in which case a fair loan can help.

Veterinary Expenses

Pets deserve the proper medical care, too, whether that’s a regular check-up, injection, medication, surgery, or accommodation. Your Centrelink payment may not be enough, which is why you can resort to a fair loan.

Event Expenses

Do you have a personal event to put together, such as a funeral, wedding, or celebration, or are you moving houses? You’ll have tons of expenses to pay for. So, if your income doesn’t cut it, a loan from Centrelink can.

Debt Consolidation

Navigating multiple loans can be a hassle, and it makes it difficult to keep up with your payments. Consolidation loans for Centrelink recipients combine your debts into one. Also, this new loan can have lower interest rates, fewer fees, and better terms.

How Much Does a Fair Loan Cost?

centrelink recipients consolidation loans

The Australian Securities and Investments Commission (ASIC) rules help protect borrowers from incurring more debt than they can afford and ensure loans have fair terms. That applies to Small Amount Credit Contracts (SACCs) and Medium Amount Credit Contracts (MACCs).

SACC

If you apply for a SACC (loan up to $2,000), you can expect to repay it in 16 days to 12 months. The lender can’t ask for security and can’t charge you over:

  • 20% establishment fee
  • 4% flare rate
  • Government charges (if they apply)
  • Default fees and enforcement costs (including the solicitor’s costs and court fees)
  • 200% of the loan total (including default charges but not enforcement costs)

MACC

MACCs range from $2,001 to $5,000, and their repayment period can be up to two years. The involved fees are:

  • 20% establishment fee
  • 48% interest fee

No, loans, for Centrelink customers or not, aren’t guaranteed, and you should think twice before working with a lender who offers pre-approved, guaranteed, or automatic acceptance loans.

After all, they defy the ASIC rules. To illustrate, lenders must inquire about an applicant’s finances, goals, and requirements. Also, they need to confirm the financial information provided by them and assess whether the loan would be suitable for the applicant or not.

If you’re scared of your loan application getting rejected, applying for a no credit check or bad credit loan is an option and a safe alternative to guaranteed loans on Centrelink.

centrelink customers fair loans

Final Words

Although governmental benefits can hinder your ability to get a loan, it’s important to understand that loan providers can’t discriminate against you for that reason. Instead, what they can and must do is ensure your income is stable and enough for you to repay the loan comfortably.

Accordingly, if your Centrelink income accommodates the loan repayments or isn’t your only income source, you can apply for a loan. Additionally, you can provide an asset as security or get a guarantor to negotiate better terms for the loan. But you’ll need the right lender, which we can help you with. Just contact us to get matched with a lender!

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