More Interest-free Loans to Support Vulnerable Australian Motorists Buy Vehicles

More Interest-free Loans to Support Vulnerable Australian Motorists Buy Vehicles
Volkswagen cars are parked in the forecourt of a inner city Volkswagen dealership in Sydney, Australia, on March 12, 2017. William West/AFP via Getty Images
Alfred Bui
Updated:

The Australian government has extended support for a trial program helping low-income families obtain vehicles following a surge in demand.

According to the Department of Social Services, the No Interest Loans Scheme for Vehicles program delivered by charity Good Shepherd Australia will receive $500,000 (US$334,000) in extra federal funding to support vulnerable families until June 30, 2024.

The government said the scheme was an alternative to other high-risk and high-interest financial products such as Buy Now Pay Later and payday loans.

Social Services Minister Amanda Rishworth stressed the importance of having a vehicle for vulnerable people, saying it helped them achieve independence.

“This includes assisting with the ability to work, to undertake caring responsibilities or seek medical care when necessary,” she said in a statement.

“We know vehicles and other related costs such as registration are expensive, and not every region has public transport readily available. That’s why (no-interest loans) for vehicles are so important to assist those who need it.

“The no-fee, no-interest loans provide a vital boost to help get people on the road and undertake activities that contribute to their wellbeing.”

What the Scheme Is About

Under the pilot program, eligible motorists can apply for no-interest loans of up to $5,000 to buy a vehicle for essential day-to-day use, including cars, mobility scooters, and motorcycles.

They can also use the loans to pay for fees associated with keeping their vehicles on the road.

Anyone can apply for the program if they earn less than $70,000 (before tax) as an individual or $100,000 as a household, are registered for health or pension cards, or have experienced domestic or family violence in the past ten years.

At present, motorists can access the program via 600 no-interest loan providers across the country.

Holden cars stand for sale at a dealership at Thebarton in Adelaide, Australia, on July 30, 2013. (Morne de Klerk/Getty Images)
Holden cars stand for sale at a dealership at Thebarton in Adelaide, Australia, on July 30, 2013. Morne de Klerk/Getty Images

The government said the scheme had provided over 5,000 car loans since its inception in September 2021 and that demand had jumped by 33 percent over the last financial year.

Good Shepherd Australia CEO Stella Avramopoulos said the high demand indicated a strong need to support vulnerable families.

“A vehicle represents so much more than just a mode of transport,” she said.
“It enables our clients to pick up their kids from school, drive to their jobs and to live their lives.”

A Surge in Car Sales in June

The government’s announcement comes as new data from the Federal Chamber of Automotive Industries (FCAI), a peak industry body, showed a sharp increase in the number of cars sold in Australia in June.

Specifically, 124,926 new vehicles were delivered during the month, up 25 percent compared to last year and the highest June result since 2018.

The FCAI pointed out that strong sales figures were achieved despite ongoing supply issues in the industry.

“Indications from our members are that demand for new vehicles remains solid, but the supply is not yet at a point to meet this demand,” FCAI chief executive Tony Weber said.

“If we could have landed more vehicles, this would have been a record June result.”

In addition, there was an increase in the sales of “zero and low emission vehicles,” with 16.6 percent being battery electric, hybrid or plug-in hybrid models.

Alfred Bui
Alfred Bui
Author
Alfred Bui is an Australian reporter based in Melbourne and focuses on local and business news. He is a former small business owner and has two master’s degrees in business and business law. Contact him at [email protected].
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