Micro-Loans for Centrelink Customers

Sadly, Centrelink recipients aren’t always eligible for loans, especially from banks. So, is there no way to get a loan if you receive Centrelink payments?

Thankfully, that’s a negative. Microloans for Centrelink customers are here to save the day. So, let’s take a look at what microloans are and how they can help Centrelink customers all over Australia. 

What this article covers:

micro loans for centrelink customers

Quite simply, microloans are loans specifically curated for Australians who receive most or all of their income from Centrelink benefits. 

Typically, individuals receiving Centrelink payments only have a few loan options. That’s because banks and private money lenders don’t like risking their money on customers who don’t have steady jobs. 

Nevertheless, some Centrelink recipients may need instant cash, and that’s where microloans come into play.

Microloans allow Centrelink recipients to access small loans without losing their Centrelink privileges. They can use that extra money however they like, whether for an emergency or to finance a small start-up business.

But where does the money exactly come from if banks and private money lenders aren’t willing to give it out?

In most cases, the money comes from Centrelink itself or a group of investors who like to put their money into practical things. The loan can also stem from nonprofits and community initiatives. And, unbelievably, you can find some special lenders who don’t mind dealing with Centrelink customers in financial hardship, even ones with bad credit. 

If you’re a Centrelink customer, you can get your hands on a microloan through several different methods. So, let’s see what they are.

Applying for an Advance Payment on Centrelink

The Human Services Department in Australia allows Centrelink customers to receive emergency cash loans, known as advance payments. 

To get a Centrelink advance payment, you need to have been receiving any of the following payments for at least three months:

  • Disability support pension 
  • Age pension 
  • Farm household allowance 
  • Carer payment 
  • Parenting payment
  • Jobseeker payment 
  • Widow allowance 
  • Youth allowance for job seekers 
  • Student youth allowance
  • Mobility allowance 
  • Austudy 
  • ABSTUDY Living Allowance
  • Family Tax Benefit Part A

Now, as the name implies, you’ll receive a few months of your income support payment or Family Tax Benefit in advance, which you’ll then pay back later from your regular Centrelink payments. 

micro loans for the centrelink customers

On the bright side, this method allows you to get a loan with no interest rates, fees, or credit checks. Unfortunately, your income will be severely diminished for the coming weeks/months. As such, you may be unable to pay for your essential purchases, like groceries, rent, or utilities. 

So, unless you can find a decent-paying job to support you for the next couple of months, a Centrelink advance payment may not be the best idea.

Also, keep in mind that you won’t be able to get a Centrelink advance if: 

  • You live outside of Australia 
  • You have a government debt
  • You’re still repaying an advance you got more than one year ago
  • You can’t repay the loan in the next six months

Applying for a No-Interest Loan

Australia offers low-income individuals and families small loans through its No Interest Loans Scheme (NILS).

With this scheme, Centrelink customers can borrow up to $1500, provided they’ll use the money for essential purchases. This means you can only use this money to pay for things like:

The beauty of the NILS is that it doesn’t come with fees or interest rates. You only boat back what you borrow and nothing more. Once you repay the loan, the money is made available to help someone else in your community. 

However, not everyone Australian can apply for a NILS loan. You need to fulfil various requirements, which include:

  • Living at the same address for at least three months
  • Having the will and ability to repay the loan amount
  • Make an income below $45,000 per year after tax, or instead, have a Health Care Card or a Pensioner Concession Card

Applying for a Microloan With a Private Lender

centrelink customers micro loans

If a Centrelink advance payment isn’t feasible for you and you don’t qualify for a NILS loan, a microloan from a private lender will be your best choice. 

What’s great about this method is that you can get the money simply by sending in an online application—no need for in-person interviews or meetings. Instead, you just write down your circumstances, state how much you want, and the lender will review your application. If he approves, you’ll receive your money in less than 24 hours. 

Of course, this type of loan will have some fees or interest rates. However, they’re nothing too serious, and the average person can easily pay them off. So, don’t worry about getting a loan from private lenders. 

How Much Can You Borrow on a Microloan?

As the name suggests, a microloan is a small loan. With it, you can borrow as little as $500. However, the maximum loan amount will vary depending on your lender. 

For instance, some lenders may allow you to borrow up to $5000. On the other hand, some will cap it at $2000. 

Still, on the whole, microloans from private lenders won’t go over the $5000 threshold. So, if that amount isn’t enough for you, you need to consider other types of loans. 

But what about Centrelink? How much can you borrow from them? Well, this will depend on what type of Centrelink payment you receive. So, let’s see what some Centrelink benefits can get you. 

Disability Support Pension, Age Pension, and Carer Payment

In six consecutive months, you can either get:

  • One advance of the highest amount
  • Two advances of lesser amounts 
  • Three advances of the lowest amount

Now, the highest and lowest amounts change depending on your pension. So, if you’re single, the lowest you can borrow is around $457, and the highest is around $1372. As for couples, the lowest is approximately $345, and the highest is $1035. 

Job Seeker Payment, Austudy, ABSTUDY, Parenting Payment, Widow Allowance, Student and Job Seeker Youth Allowance

If you’re reclining any of the stated benefits, the most you can get in advance is $500, and the least is $250. You can get your advance in one or two instalments. 

Special Employment Advance

If your income support gets reduced by 50% or more, you can apply for a special employment advance. With it, you can borrow anywhere from $50 to $500. 

You can also get this advance if you get a job but don’t have enough money for something you need to do it. 

centrelink customers micro loan

This will depend on how much you’re borrowing. 

According to the Australian Securities & Investments Commission (ASIC), small loans, i.e., $2000 or less, don’t come with interest rates. A lender can only charge the borrower a 20% establishment fee and a 4% monthly fee. 

So, if you’ve borrowed $1000 to be repaid in a month, you’ll pay the following:

  • Establishment fee: $200
  • Monthly fee: $40
  • Total amount: $1240 

But what if you need to borrow more than $2000? Say you need a fair loan of around $3000.

Well, now your loan will come with an interest rate. Typically, most lenders have a fixed interest rate of 5.99% per annum and an establishment fee of anywhere from $100-$700 (such loans have an annual percentage rate of 48%).

With loans like this, the longer it takes to repay the loan, the more you’ll have to pay. So, depending on your loan terms, you can end up paying anywhere from $3600 to $4300 for a $3000 loan.   

Note: Keep in mind that both small and big loans can have late fees, which are charged when you don’t make your payments on time. There may also be what’s known as default fees, which can be twice as much as the original loan. This is the case in many types of loans, such as bond loans.

If you’ve borrowed money by getting a Centrelink advance, then the loan amount will be automatically deducted from your Centrelink payments.

As for loans from a private lender, you can make payments weekly, fortnightly, or monthly as per your loan terms. 

But what if you can repay your loan before your specified loan term is up? Then, by all means, do it.

The longer you wait, the more you’ll end up paying due to the accumulated fees and interest rates. Most lenders don’t mind that you repay your loan early and, accordingly, won’t charge you an early payment fee. Still, not all lenders are the same, so make sure you check with your lender first.

can centrelink customers with bad credit get a microloan

Absolutely. Many lenders who give out microloans don’t conduct a credit check. And even if they do, they don’t automatically deny you. They first listen to your story and then judge whether you’ll be a good client or not.

But why do those lenders take the risk and lend their money to people with bad credit? 

Well, that’s because they believe that everyone deserves a fair chance. So, instead of looking at your past financial circumstances, they’ll look at your current ones. 

They see your recent spending behaviour and find out if you have what it takes to pay back the loan. If everything checks out, they’ll give you the loan without trouble or fuss. 

On the whole, most money lenders in Australia will give you a micro loan provided that you:

  • Are a citizen or permanent resident of Australia
  • Are at least 18 years of age
  • Have had a steady job/income for the past three months
  • Have an active bank account, email and phone number

How to Apply for a Microloan

Thankfully, it’s incredibly easy to apply for a microloan. 

If you want a Centrelink advance payment, then you need to head to the Service Australia website and follow their instructions. As for the NILS, you can either contact your local NILS provider or go to the Good Shepherd website for more information. 

If you’ll be applying for a mirror loan with a private lender, all you need to do is fill out an online application. In this application, you’ll state your personal information as well as how much money you’d like to borrow. 

 The lender will then review your application and call you to confirm your details and get more information. If all is to his liking, he’ll send you the loan contract to sign. Once that’s done, he’ll send the money to your bank account.

Information and Documents Needed for a Micro Loan Application

Most loan applications require that you share the following:

  • A copy of your ID
  • Certain personal details, such as your email, address, and phone number
  • Employment details, if present  
  • Proof of Centrelink income (payslip or income statement)
  • 90-day history of your bank transactions

personal micro loans for centrelink customers

As with everything, microloans have their pros and cons. So, let’s see what they are.

Pros 

  • Microloans are easy to get, only having minimal requirements.
  • Almost everyone will get approved for a microloan, even people with bad credit.
  • They have little to no interest rates.
  • Loan terms are relatively flexible.
  • Microloans can help you improve your credit score.
  • You can borrow as many loans as you want, provided you pay each one in full and on time. 

Cons 

  • Loan amounts are limited.
  • Your credit score may be damaged if you don’t make your payments on time.
  • In the case of a secured loan, you may end up losing your precious asset. 

Note: For NILS, you may not be eligible for the loan if you don’t fulfil any of their requirements or if you’ll be using the money for something other than essential purchases. And unfortunately, you can’t apply for NILS or Centrelink advance payments unlimitedly. 

FAQs

Can You Apply for Multiple Microloans for Centrelink Customers?

Technically, you can apply for as many micro-loans as you like. However, in reality, this will put a huge financial strain on you. 

Having one debt is already hard for most people, so imagine having multiple. So, don’t take out more than one loan at a time and make sure to repay it fully to avoid a bad credit score and other penalties.

microloans for centrelink customers

What’s an Establishment Fee?

An establishment fee is charged once your contract is signed and the loan is established. This fee covers things like credit assurance, assessment, and the verification services employed to process your application. Establishment fees need to be paid upfront, and they aren’t refundable. 

How Much Time Do You Get to Repay a No-Interest Loan?

Typically, no-interest loans from the NILS must be repaid over 12-18 months. The earlier you repay the loan, the faster the money can be used to help someone else. 

Final Thoughts

Microloans for Centrelink customers are readily available and easy to acquire. 

You can get the loan either from Centrelink itself, the NILS, or a private money lender. Each method has its perks and limitations, so make sure to choose the method that suits you best. 

Still, if you’re going with a private lender, keep in mind that there will be fees or interest rates. Thankfully, though, the lenders won’t impose any particular requirements or refuse to lend you the money if you have bad credit. 

To top it off, they’ll usually give you as much money as you need, and they won’t specify how you need to use it. So, all in all, it’s not too bad a deal.

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