Loans for people on Centrelink

Can I get a personal loan while recieving Centrelink payments?

Think a personal loan is off-limits because you’re on Centrelink? Think again. While lenders may prefer the predictable rhythm of a 9-to-5 salary, many look at government benefits as a stable form of income.

In Australia, lenders legally have to lend money responsibly. They can’t approve a loan application if they think you won’t be able to make the repayments. But if you meet a lender's overall lending criteria and can prove you’ll be able to make regular payments on time, you have a solid chance at being approved for a personal loan, even if you are receiving Centrelink payments.

There are also specialist lenders that offer personal loans specifically for those with a low credit score, or who have a limited repayment history. They might also be more likely to lend to people receiving Centrelink payments. However, these lenders may charge higher interest rates and fees.

You should be particularly careful when considering loans from lenders that don’t conduct credit checks, as these can be riskier and more expensive than others on the market. It’s worth looking into the fees, interest rates, contract terms, and risks involved before locking in.

For larger loans, you could consider a secured personal loan, where you use an asset (like a car) as collateral. As the lender can sell the asset to recover its money if you can’t repay the loan, this helps to reduce its financial risk and, in turn, can improve your chance of approval. 

It’s also important to consider if taking out a loan is a good idea for you and your personal circumstances, or if there are other options available that may suit you better.

What Centrelink payments are an eligible form of income?

Some lenders view Centrelink payments to be genuine income, though not all payment types will be considered. 

For example, Youth Allowance and Austudy may not be accepted as income, as they’re temporary payments and dependent on your circumstances. Similarly, some lenders may not offer loans to applicants with JobSeeker as their sole form of income.

Payments more likely to be counted as income include:

• Age Pension
• Family Tax Benefit
• Disability and/or Carers payments

As each lender has its own terms, conditions, and eligibility criteria, you may want to contact one directly before you apply for a personal loan to confirm if your Centrelink payments are accepted as income. 

It could also be worth seeking professional financial advice or counselling before you apply for any particular loan, as an unsuccessful application could lower your credit score, making it harder for you to borrow money in the future.

What documents do you need to apply for a personal loan?

When applying for a personal loan you’ll generally need to provide:

• Valid photo ID such as a drivers licence or passport.
• Proof of income, typically payslips, past tax returns, or your Centrelink payment summary.
• Proof of savings, such as bank statements.
• Details of any current employment.
• Details of any assets you own, such as vehicles and property.
• Details of any other debts, such as other personal loans, a home loan, credit card debts, and outstanding buy now pay later (BNPL) balances.
• Information on your general living expenses, including groceries, utilities, streaming services, and rent.

What should I look for when comparing loans?

When researching and comparing personal loans, it’s a good idea look at each potential personal loans’:

• Interest rate (including if it is fixed or variable)
• Comparison rate (to get a better idea of the overall cost)
• Fees and charges (including fees for accessing certain features)
• Term length (longer loans may cost less month-to-month but more in interest overall)
• Features and benefits (such as the ability to make extra repayments,exit the loan early, or redraw extra payments if required)
• Security requirements (do you need to offer an asset as collateral?)

If you’re on Centrelink, you may also want to look carefully at a lender’s eligibility criteria before making an application. Some lenders might specify a minimum annual income or explicitly state that Centrelink recipients are ineligible for certain loans. It may be worth calling the lender you’re considering to ask about your eligibility before you apply. 

How much can I realistically afford to repay?

If you think you might be eligible for a particular loan, use a personal loan repayment calculator to work out how much repayments are likely to be. 

Compare this against your income and Centrelink payments, factoring in your household expenses, to decide if you could realistically afford the loan. 

Keep in mind, most online calculators don't include a loan’s upfront or ongoing fees, which you may also need to budget for.

What other lending options might be available for Centrelink recipients?

Before applying for a personal loan, it’s worth exploring other options available to you and whether they meet your needs:

Centrelink advance payment

You may be eligible to receive an advance payment from Services Australia, either all at once or in two instalments.

How much you can get will depend on the type of payment you receive. For example, if you’re on JobSeeker, Youth Allowance, or Austudy, you may be able to get an advance of between $250 and $500.

You will need to repay the advance each fortnight, and repayments are normally deducted from the payment amount you receive, although you can choose to repay it early if you prefer.

Home Equity Access Scheme

You might be eligible for a non-taxable loan via this scheme if you or your partner is of Age Pension age, you receive or are eligible to receive a qualifying Centrelink or Services Australia pension (including the Age Pension), and you own property in Australia.

Under the scheme, you can get a loan of up to 1.5 times your pension’s maximum payment rate each fortnight. Compound interest is charged at a set rate on the outstanding loan balance until it’s paid in full. Its full eligibility requirements and current interest rate are available from Services Australia.

No Interest Loans (NILs)

If you have a Health Care Card or Pension Card, have suffered from family or domestic violence in the last 10 years, or earn less than $70,000 a year before tax ($100,000 for couples or those with dependants), you might be able to get a no interest loan (NIL) from Good Shepherd. Though, you’ll have to show you can repay the loan.

Loans of up to $2,000 are available for essential goods and services, such as a fridge or a washing machine, car repairs, or a medical procedure or dental service. 

$3,000 loans are available to cover bond and rent advances, council rates, and recovery costs from natural disasters. 

A NILS loan is not a cash loan,and cannot be used on other expenses such as food, or repaying other debts.

Payday loans

Some payday lenders may consider your Centrelink payment eligible income, but be aware of the risks and expenses involved with payday loans. Payday lenders can charge an establishment fee of 20% and monthly service fees of 4% of the loan amount. This means you can end up paying back a lot more than you borrowed.

Consider comparing the total loan costs and criteria of a short term loan (payday loan) against regular personal loans and other available alternatives to work out if there are cheaper and less risky ways to borrow money.

What other support is available to help me with my finances?

Whether your Centrelink payment is supplemental or your main income source, it doesn’t automatically stop you from getting a personal loan. However, it’s important to also consider other credit options, such as government and community schemes, that could be cheaper or better suited to your unique situation and needs.

If you’re experiencing financial difficulty, you can contact the National Debt Helpline (NDH) on 1800 007 007 to speak to a confidential, independent financial counsellor for free.