When most of your money comes from Centrelink, there isn’t a lot of room for surprises. Then the fridge dies. Or the car needs a new clutch. Or you finally find a rental, and the bond is due before your next payment lands. At that point it’s natural to start looking for quick cash. If you want to explore centrelink loan options, it helps to know what’s out there from lenders, and just as much, what other help exists that won’t cost you as much.
Can You Get a Loan on Centrelink Income?
Short answer, yes. Whether you’re on the pension, JobSeeker, a carer or parenting payment, or the DSP, a fair few lenders will count that money when they look at your application.
They won’t just hand it over, though. By law they have to check the repayments won’t leave you short, which means they’ll want your Centrelink statement and a look through your bank account for the last few months.
Look at the Free and Low-Cost Options First
Before you sign up for any loan, it’s worth spending ten minutes on these. They’re often a lot cheaper, and sometimes free.
Centrelink itself may let you take part of your payment early as an advance. It comes back out of your next few payments in small bits, and you don’t pay anything extra on top. Then there’s NILS, the No Interest Loan Scheme. It’s run through community groups and covers things like whitegoods, car repairs and bonds, and again you pay back only what you borrowed. And if it’s a bill that’s the problem, try ringing the company. Power, gas, phone and water providers nearly all have some kind of hardship plan, but they usually won’t offer it unless you ask.
Don’t know which of these to try first? The National Debt Helpline on 1800 007 007 is a good place to start. You’ll get a financial counsellor who costs nothing, doesn’t work for any lender, and can help you figure out what you’d actually qualify for.
What Documents Do Lenders Usually Ask For?
There isn’t a mountain of paperwork, thankfully. Expect to show some ID, such as a driver’s licence or Medicare card, plus your Centrelink income statement and around 90 days of bank statements. You’ll also fill in a short form with your contact details.
Most lenders that work with Centrelink customers won’t ask for payslips or a letter from an employer.
Will a Loan Affect Your Centrelink Payments?
Usually not. Borrowing money generally isn’t counted as income by Centrelink. Still, what you buy with it, or how much you have sitting in your account at a given moment, can sometimes matter depending on your payment. If you’re unsure, check with Services Australia first. A quick call now is better than a surprise later.
Choosing Repayments That Fit Your Benefit Cycle
When you explore centrelink loan options, pay close attention to when the repayments come out. Most Centrelink payments arrive fortnightly, so a repayment that’s taken the day after your payment lands is far easier to live with than one due the day before.
It’s also worth asking whether you’ll be charged for paying the loan off early, what happens if a repayment fails, and whether the dates can be moved if your circumstances change. How the lender answers those questions says a lot about them.
Signs of a Responsible Lender
A lender you can trust will hold an Australian Credit Licence. You can check that yourself on ASIC’s website in a few minutes. They’ll go through your income and spending properly rather than rubber-stamping the application. Every fee will be explained clearly before you sign. And if things go wrong partway through, they’ll talk to you about hardship options.
Be careful with anyone promising guaranteed approval, or nudging you to take out a bigger loan than you asked for, or more than one at a time.
Avoiding Repeat Borrowing
Watch out for this one. You borrow to cover the rent, the repayments make next fortnight tight, so you borrow again, and around it goes. Once that starts, another loan won’t fix it. A financial counsellor will sit down with you, go through where the money’s going, sort out the debts you’ve already got, and quite often turn up help you’d never heard of.
Making an Informed Choice
There’s nothing wrong with borrowing when something genuinely can’t wait. Just remember it isn’t free, and on a Centrelink budget the fees bite harder than they would for most people. Try the no-cost and low-cost routes first. If you still need a loan, compare what you’ll repay in total, stick with a licensed lender who’s open about fees, and set the repayments for right after your payment comes in. Done that way, a loan can get you over a hump without causing a bigger one down the track.
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