Single parents may find it more difficult to be approved for a car loan because they're bringing in a single income and have dependents.
If you're a single parent in a good financial situation and in permanent employment, you can still get a car loan.
Single parents receiving support from Centrelink may find they can't use those funds to help them get a loan.
Why is it difficult for a single parent to be approved for a car loan?
There are a few scenarios where single parents might find it difficult to access car finance.
As single parents rely on a sole income, they may not meet the financial requirements set by lenders.
This might be because they're using one income but also have the solo financial responsibility of paying for the child(ren).
Another scenario is that as a single parent they may be working part-time in order to take care of their children.
Some single parents also receive Centrelink support and this can have an impact on whether they're eligible for a car loan, as lenders won't necessarily consider it as income.
On top of these scenarios, single parents will face the same blockers as any borrower: low credit scores, poor finances, other loans or lack of solid employment.
To put you in the best position for getting car loan approval, it's important to compare your options. Comparing can help you weed out loans you're less likely to be approved for, as well as help you find the best loan that you could be approved for.
Interest rate. The higher the interest rate, the more your repayments will be. Check whether the rate is fixed or variable and compare the rate on offer with other loans on offer.
Loan terms. This is how long you’ll have to repay the loan. You can usually choose betwee 1 and 7 years.
Repayment flexibility. Find out if you can make additional repayments without charge, if you can repay your loan early and if you can line up your repayments to match your pay frequency.
Fees. Most loans come with fees, but some loans charge less than others. Check for upfront fees like application fees, and ongoing fees like monthly or annual account-keeping fees.
Additional features. The loan may also come with additional features, such as extended warranty or a loan redraw facility.
Security. You can choose between a secured loan or an unsecured loan. A secured loan means you use your vehicle as collateral in case you can't repay the loan, but you get lower rates. This may increase your chances of getting a loan, but there are usually conditions on the type of vehicle.
What to watch out for
When comparing your car loan options, make sure you check the reputability of the lender. Some lenders may claim to help single parents or low-income earners and then charge extremely high fees and rates that can make it difficult to manage day-to-day finances.
Multiple credit applications in a short space of time will have an effect on your credit score, making you less likely to be approved for a loan. If you’re unsure of your eligibility with a certain lender, it is worth talking to them first.
How to apply for a car loan as a single parent
Once you have compared your options using the comparison table on this page and clarified your chosen lender's eligibility criteria, you can usually apply online. Alternatively, you might prefer to apply in person (if possible) or over the phone.
Before you apply you should gather all of the relevant documentation to help your application. This includes personal identification, bank statements and payslips.
Once you've applied, how long the decision takes will depend on the lender. It could be a matter of hours or it could be a couple of days.
Our expert says: Follow these tips when applying for your car loan
"Yes, it can be more challenging to get a car loan if you're on a single income with a dependent. But that doesn't mean you can't get a loan.
To make the process smoother, here are some tips:
1. Speak to lenders. That's right, you can call them up. Ask them about their eligibility criteria and see if they have stricter criteria around single income parents. Bring up any Centrelink support or work hours that you think might be a problem. 2. Consider securing the loan. You can choose to secure a loan against the vehicle. This means if you fail to repay the loan, the lender can repossess it. It makes lenders a little less uneasy about lending money. 3. Get your finances in check. Being a single parent does not mean you can't repay a loan. So be ready to show that. Organise your bank statements, close off any other debt facilities you might have and ensure your credit file is showing an Excellent score."
It can be really disheartening when a loan application is rejected, but this doesn't mean you have to give up.
The best thing to do is take stock of why it was rejected, although many lenders won't necessarily tell you. You could try and give them a call to find out though.
Too many credit applications in a short period of time raises red flags for lenders, so don't rush into applying anywhere else just yet. Call other lenders first to clarify their eligibility requirements to be sure you're eligible for a loan with them. Check your credit score to make sure it was good enough for a loan. Then cut back on any unnecessary costs that a lender might have seen and been concerned about: things like too many streaming services, expensive gym memberships and multiple takeout expenses.
Yes you can. Not every lender will accept Centrelink payments as forms of income however, so it's best to check eligibility before you apply anywhere.
You will usually have to have another form of income alongside your Centrelink payments as well. But again, this can depend on the lender.
Applying for credit won't necessarily impact your credit score by itself. When you apply the lender will do a 'soft' credit check and that won't harm your score. However, if you apply to multiple lenders in a short period of time, this may have an effect on your score.
If you apply and are approved for a car loan, you may find that your credit score goes down at first. As you pay off your loan on time, your score will bounce back up and may even improve. If you miss repayments however, your score will go down.
Matt Corke is Finder’s head of publishing ventures. Prior to this he was head of publishing for Australia, New Zealand and emerging markets. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time, he has survived the dot-com crash and countless Google algorithm updates. See full bio
Just wondering if I can go for a car loan. I just recently moved from Queensland to Northern Territory.
Finder
JeniSeptember 4, 2018Finder
Hi Tanya,
Thank you for getting in touch with Finder.
Even if you have just recently moved, as long as you meet the financial requirements set by lenders – let’s say Centrelink payments, that should be fine. In addition, a supplementary income is helpful to support your loan application. On this page, you’ll see a table with the list of banks/lenders that you may apply for a car loan. It is best to check the eligibility criteria to see what your chances are of being approved.
Please note that it’s important to call a few lenders to discuss your eligibility first. Having too many credit enquiries through multiple applications in a short period of time can affect your credit history and make you appear less appealing to lenders.
I hope this helps.
Please feel free to reach out to us if you have any other enquiries.
Thank you and have a wonderful day!
Cheers,
Jeni
EmsJuly 23, 2016
I’m single mother with 4 kids Centerlink is my main income and I also receive child support,I have $7000 saved in my bank to help with purchasing a car,would I be able to get finance for a car worth between 20,000 to $25,000,
What would be best option
Finder
MayJuly 24, 2016Finder
Hi Ems,
Thanks for your inquiry and welcome to Finder.
Since you’re on Centrelink payments, most lenders would require you to have an additional source of income to support your loan application.
I am a single mother of 3 on a single parenting payment from Centrelink, am I able to get a loan for a car I have someone who is willing to go guarantor for me on a loan
You can select the “Go to site” button of your preferred lender to proceed with your application. You can also contact the provider if you have specific questions. A gentle reminder, please ensure to read through the relevant product disclosure statement and terms and conditions to ensure that you got everything covered before you apply.
I hope this information will be of use.
Thanks,
Elizabeth
CharlenaDecember 13, 2014
Wondering if a singel mothers with two children can apply for a car loan.
Finder
ShirleyDecember 15, 2014Finder
Hi Charlena,
Thanks for your question.
If the source of your primary income is not from Centrelink and you are currently employed, then you may be eligible for most loans featured on this page.
It’s advisable that you get in touch with a few of the lenders first to discuss your options and eligibility.
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Hi,
Just wondering if I can go for a car loan. I just recently moved from Queensland to Northern Territory.
Hi Tanya,
Thank you for getting in touch with Finder.
Even if you have just recently moved, as long as you meet the financial requirements set by lenders – let’s say Centrelink payments, that should be fine. In addition, a supplementary income is helpful to support your loan application. On this page, you’ll see a table with the list of banks/lenders that you may apply for a car loan. It is best to check the eligibility criteria to see what your chances are of being approved.
Please note that it’s important to call a few lenders to discuss your eligibility first. Having too many credit enquiries through multiple applications in a short period of time can affect your credit history and make you appear less appealing to lenders.
I hope this helps.
Please feel free to reach out to us if you have any other enquiries.
Thank you and have a wonderful day!
Cheers,
Jeni
I’m single mother with 4 kids Centerlink is my main income and I also receive child support,I have $7000 saved in my bank to help with purchasing a car,would I be able to get finance for a car worth between 20,000 to $25,000,
What would be best option
Hi Ems,
Thanks for your inquiry and welcome to Finder.
Since you’re on Centrelink payments, most lenders would require you to have an additional source of income to support your loan application.
Nonetheless, though we’re not sure if you’ll be approved for a loan or not, as a single parent, your options would either be secured personal loan, unsecured personal loan, or a payday loan.
Hope that helps.
Cheers,
May
I am a single mother of 3 on a single parenting payment from Centrelink, am I able to get a loan for a car I have someone who is willing to go guarantor for me on a loan
Hi Trish,
Thanks for your question.
You can find lenders that consider Centrelink applicants which includes short-term lenders and banks), you can also find a guide on guarantor personal loans, our guide on joint application personal loans.
You can select the “Go to site” button of your preferred lender to proceed with your application. You can also contact the provider if you have specific questions. A gentle reminder, please ensure to read through the relevant product disclosure statement and terms and conditions to ensure that you got everything covered before you apply.
I hope this information will be of use.
Thanks,
Elizabeth
Wondering if a singel mothers with two children can apply for a car loan.
Hi Charlena,
Thanks for your question.
If the source of your primary income is not from Centrelink and you are currently employed, then you may be eligible for most loans featured on this page.
It’s advisable that you get in touch with a few of the lenders first to discuss your options and eligibility.
Cheers,
Shirley