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Lenders take several factors into account when reviewing applications from people who receive Centrelink benefits. They look at the stability of benefits, total income after essential costs, and any existing debts. Providers review bank transactions for overdrawn accounts or signs of financial strain. They also conduct affordability checks to ensure the borrower can make repayments without hardship.
Many lenders require applicants to show consistent deposits and a minimum income level that may include both Centrelink and wages. They also prefer a clean repayment history with no recent dishonours. These checks help lenders meet expectations under the National Consumer Credit Protection Act and ASIC guidance.
Payday loans fall under the definition of Small Amount Credit Contracts (SACCs), regulated under the National Consumer Credit Protection Act. They must:
The law doesn’t ban people on Centrelink from getting payday loans. However, lenders are required to apply responsible lending checks, and specific thresholds apply when Centrelink makes up a large portion of your income.
If more than 50% of your total income is from Centrelink, payday loan repayments must not exceed 20% of your gross (pre-tax) income. This rule was introduced to protect welfare recipients from entering unsustainable debt cycles.
As of 2023, additional changes extended protection even further:
If a loan breaches these thresholds, it’s considered “unsuitable” and cannot legally be approved.
Lenders must verify affordability before issuing a loan. They are required to obtain 90 days of bank statements, assess income sources including Centrelink, and review rent, bills, debts, and general spending to ensure the loan will not create substantial hardship.
If a borrower has taken out two or more small amount credit contracts in the past 90 days, or has a history of default, the new application is likely to be assessed as unsuitable and must be declined.
Lenders consider most Centrelink payments as income, but will only approve a loan if it passes affordability and protected earnings tests.
Payments like crisis payments, one-off grants, or low/irregular supplements may not be accepted as income.
Australian credit laws require lenders to assess the suitability of any loan, including those offered to Centrelink recipients. This means providers must confirm that a loan will not place the borrower into financial difficulty. Lenders may set internal limits on how much Centrelink income they accept as a percentage of total income. Some also have caps on loan amounts available to people whose primary income is benefits.
Borrowers should be aware that payday loans come with higher fees compared with other types of credit. Costs must comply with fee caps set out in the national credit laws. Lenders must show all charges upfront and explain the total repayment for the loan term.
Centrelink recipients who need short term financial help may also consider other options. No Interest Loan Scheme providers offer small loans with no fees or interest for essential goods and services. Some community organisations provide emergency relief for food, utilities, and other urgent needs. Telcos and utility companies also give payment plans that might reduce immediate strain.
Australians may avoid relying too much on expensive credit by being aware of all the options accessible to them. Financial counseling services can offer free advice on debt, budgeting, and safer options if necessary.
Yes, but only if the lender certifies that you won't experience hardship and the repayments remain under the legal income limitations, which are typically 10% of your net income.
If Centrelink is your main income, your repayments must not exceed 20% of gross income. However, under newer rules, all borrowers are generally limited to 10% of their net income.
Most will assess Centrelink income, but some may reject applications if it’s your sole income. Regularity, amount and payment type all matter.
No, Centrelink won’t stop your benefits if you get a loan. But if you default and a court orders garnishment, part of your future benefits could be deducted.
Yes, interest-free Centrelink advances and NILS loans are both safer, legal alternatives. They cost nothing and won’t trap you in repeat debt cycles.
Use your MyGov account or visit a Centrelink office. You must meet eligibility rules and can usually only have one advance at a time.
You should contact the lender early. If you're in hardship, they must consider a payment arrangement. Financial counsellors can also help negotiate or lodge a complaint with AFCA.
If you’ve had two SACCs in the past 90 days, further loans are presumed unsuitable. Even without multiple loans, repayment caps still apply.
https://lawhandbook.sa.gov.au/
https://www.legislation.gov.au/
https://www.servicesaustralia.gov.au/
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Disclaimer
Loan Owl, a trading name for Simple Finance Group Pty Ltd (ABN 70 626 186 418) and holder of Australian Credit License 509422, operates as a lender and referral service. We do not endorse any specific credit contract. Upon receiving an offer or referral to a lending partner, they will evaluate your application, provide a suitable credit contract, and inform you of the outcome. Both we and our lending partners will disclose all fees, charges, and terms before any contract is entered into. We may receive a referral fee, the amount of which is not determinable. We advise seeking independent legal and financial counsel before engaging in any financial products. The rates and loan terms provided on this website are for indicative purposes only. Loan Owl, as a lender, may process applications within 60 minutes, and loan disbursement may occur immediately upon contract signing. However, the timing of fund disbursement depends on your banking institution's policies.
*Approved funds are transferred on the same day, subject to approval during business hours and completion of all required documentation including Pay to bank agreements. Transfer times may vary depending on your bank’s processing times. Not all banks support instant deposits, and some transactions may take longer to reflect in your account.