What are my car loan options as a casual employee?
Getting Car Loans For Casual Workers
Casual workers make up one-fifth of the Australian workforce. Particularly in the retail and hospitality industries, it can be really hard to find a permanent position, though you might still be working full-time hours as a casual.
Getting a car loan with a casual job can be tricky, so we've put together a checklist specifically for casual employees to help you secure a car loan when you need it.
Criteria for a casual worker car loan
Here's what you'll need to be eligible for a car loan as a casual worker:
Showing that you consistently save money over time will demonstrate that you will be able to repay the loan.
2. 12 months consistent employment
If you've been employed at the same place or in the same industry for a while, this shows your ability to maintain regular work and income, a good indicator that you'll maintain this employment during your loan term.
3. Minimum income
Lenders may require that you have a minimum annual income, such as $15,000 to $35,000 per year, to provide car loans for casual workers. This can vary between lenders. You can show your annual income with previous years tax returns.
4. Good credit history
If you can show that you've always paid your bills, have a consistent savings history, and have repaid any past loans on time, you'll be in a good position to apply for a casual worker car loan.
5. Australian permanent resident, and over 18 years
Car loans for casual workers are more difficult if you don't have a permanent resident visa.
Show that you have enough additional income to make loan payments.
7. Working minimum hours
Some lenders require that you work a minimum number of hours each week, such as 25 hours per week, to increase your likelihood of being able to afford your casual work loan repayments.
Tips for Getting a Casual Employment Car Loan
The reason that lenders are traditionally hesitant to provide car loans for casual workers or seasonal employees is the risk that you won't be able to meet the loan repayments if you have fewer shifts, or you are out of work the next year.
To increase your chances of approval, here's some tips to prove your creditworthiness, and increase your chances of approval for a casual employment loan.
- Letter from employer
When you can provide a letter from your employer confirming that you have regular hours and stable employment, despite your casual status, this provides certainty to the lender.
- Be sure to get your tax return done
This shows your annual income, and your ability to afford a casual work loan.
- Use a car finance broker so you have access to more lenders in one place.
With access to a range of bank and non-bank lenders, and a specialist who'll use their expertise to match your financial profile to the lender who'll give you the best deal on a loan, using a car finance broker can save you a lot of time and stress.
- Avoid multiple loan applications
Do your research, or use a car finance broker, to ensure you will be approved for the loan you decide to apply for. This keeps your credit file clean.
- Consider a personal loan rather than a secured car loan
In some cases, it'll be easier to be approved for a personal loan than a regular car loan. With an alternative lender, you could even find you still qualify for quite a low rate.
- Purchase a second-hand car.
Buying second hand rather than brand new means you won't need to borrow as much. It's easier to get approval for a smaller amount when you are a casual employee.
- Consider a joint application or guarantor application
If your partner has permanent or full-time work, or a family member is willing to act as a guarantor, this provides extra security to the lender and increases your chances of approval.
- Save a deposit
This will reduce the amount you need to borrow, as well as demonstrating your ability to put money away each pay cycle.
- Use an alternative lender, rather than a major bank.
Some big banks, such as Commonwealth Bank, do offer car loans for casual workers, but it does pay to consider peer-to-peer lenders and other non-bank options which may provide a better deal.
- Provide security for the loan.
If you own assets such as a fully paid car, or a home, this will increase your chances of approval for a casual work loan.
- Prove that you're able to repay the loan on time
Whether you've got savings, a regular set of shifts, or you are earning more than you spend, all of these factors contribute to proving that you'll comfortably meet loan repayments.
- Use an accountant
An accountant will be able to demonstrate that you consistently meet your payments and that over time your income will support repayment of your loan.
Hopefully this information will help you to make a successful application for your casual employment car loan. If you'd like a hand with the application, or some guidance on selecting a lender who will approve your car loan, we'd be happy to help.