With the COVID situation changing every week, you might find it difficult to keep track of what impact the changing landscape will have on your finances. Here’s what you need to know.
You’re probably sick of hearing that we’re living in unprecedented times - we’re hearing it all the time too, including from the lenders we work with. But unprecedented times call for unprecedented lender policies, which means our lenders are constantly updating their policies to react to the evolving pandemic.
Early Access to Super: not a deal breaker, as long as you didn’t use it to buy a jet ski
In response to the economic fallout that was expected to result from the COVID-19 pandemic, the Government announced that Australian’s could now apply to access their super early. Applicants could withdraw up to $10,000 before 1 July 2020, and a further $10,000 from 1 July 2020 to 31 December 2020.
The scheme was designed to provide relief for those facing “severe financial hardship”, so understandably lenders have been sceptical to lend to anyone that participated.
But most recent data suggests that around 2 million Australians have withdrawn their superannuation, with 1 in 5 young Australians withdrawing under the scheme. Research also started to emerge that showed Australian’s weren’t using their withdrawn super in the intended way.
In response to the widespread withdrawal, and misuse, of superannuation across Australia, most lenders decided that a super withdrawal in isolation isn’t a deal breaker when it comes to your loan application.
But if you’re suffering significant financial hardship, or irresponsible spending of the withdrawn super is evident on your bank statements (e.g. purchase of luxury goods or gambling), then lenders are unlikely to approve your application.
Payment holidays: you’ll need to be back on track
Lenders across Australia have responded to customers facing financial hardship by allowing them to take a break from their loan repayments. This was a no-brainer for Australian’s who had been stood-down and were struggling to meet the regular payments on their mortgage, or other financial commitment.
If you’re back on your feet after a payment holiday, and feel financially secure enough to start thinking about getting a car loan, you’ll need to demonstrate that you’ve resumed regular repayments. You can do this once you have proof of 2-3.
For most lenders, you’ll also need to have caught up on your foregone repayments, but this isn’t as strict a requirement.
If you’re looking for a car loan but not sure where you stand after a payment holiday, get in touch and we can help you understand your position.
Jobkeeper income: not a problem, provided you haven’t been stood down
Jobkeeper will be the most expensive welfare program in Australia’s history, with at least half the workforce estimated to have received a JobKeeper payment by the time the Scheme comes to its conclusion in March 2021.
It’s not surprising then that many Australian’s who need a new car are on JobKeeper, and many are left wondering how this will impact their loan application.
The good news? The stance of the majority of lenders is that as long as you are still working (i.e. have not been stood down), your JobKeeper income will be assessed as normal.
Victoria: business as usual (sort of)
From Sunday August 2nd, Victoria entered a stage 4 lockdown which meant curfews and only leaving the house for exercise, work or on compassionate grounds.
Despite the restrictions, those that do still want to purchase a vehicle can get financed in the usual way. That means lenders won’t discriminate against Victorian citizens.
While the restrictions do make it difficult to buy a car, there are still a handful of ways Victorian’s can purchase a vehicle during the lockdown, including:
- Online ordering platforms
- A private sale within 5km of your home
- Online auction sites
To Sum Up
If you’re thinking about getting a car loan but don’t know how you might be impacted by COVID-related policies, you’re not alone.
It’s the Driva teams job to stay on top of lender policy changes, so get in touch to get your eligibility questions answered.