Buying a Car on a Low-Income or Centrelink

If you are a low-income earner, and are in need of a car because your current car cannot be fixed or you need a car for the first time, you may wonder how you will have get the funds you need to make this purchase.
While it may be difficult on a low income, there are still vital steps you can take to secure the funding you need to purchase a car.

Below are some tips to help you find the money you need to purchase a car, even on a low income or on Centrelink.

Start Saving
The best way to purchase a new car is without borrowing any money. In order to do this, you will have to start a separate savings account that is designed to hold funds to purchase a car. Take a look at your household budget and determine how much money you have available to set aside out of each pay cheque to put towards the purchase of a car. You may have to cut back on some areas of your household budget in order to save enough money back.

The government also offer two special savings plans that are designed to help you save money faster. Both the Saver Plus account and the AddsUp account are special savings accounts you can set up and create a series of goals you want to meet. Once these goals are met, you will receive matching funds of up to $500 instantly. This can help you raise at least $1,000 towards the purchase of a new car fairly quickly.

Determine How Much You Can Afford to Spend
Before you even start shopping for a car to purchase, it is very important that you determine exactly how much you have available to put towards the purchase of car. If you have money in a savings account, determine how much of this money you can use toward buying a car. If you are planning to take out a loan to cover some of the costs of the loan, you should determine exactly how much you can afford in monthly or fortnightly car payments. Avoid high interest quick loans schemes as they have loose lending criteria which may but you in a worst position should you not be able to service your loan.

Alternative Loans
The first place you want to turn to for a car loan is a special low or no-interest loan through the government or non-profit. Depending on your specific situation, you may not be eligible to use these loans towards the purchase of a car if you live in an area that has accessible transport options. However, it never hurts to try and apply for a loan to see if you qualify.

NILS Loans. This is a no-interest loan that is offered to low-income earners. You can borrow up to $1,200 depending on your specific situation, and pay it back over the next 18 months.

Bank or Credit Union
If you are not eligible for a government loan, your next option is to try to get a loan through your bank or credit union. Just because you are a low-income earner does not necessarily mean that you will not be eligible for a small loan. If your credit it good, you still may get the loan you need. If your bank turns you down, be sure to check with a local credit union, they are sometime more willing to offer small loans.

Whatever you do, avoid using any type of payday loan or high interest credit card to get the car you want. These types of loans will cost you much more in the end and can wreak havoc on your finances. Just be patient and start saving and before long you will have the funds you need to purchase the car you want. Read about some of the most common borrowing questions for those on low income or Centrelink.