Car Loans For Casual Workers
Getting car loans for casual workers can be tough and if you’re one of the many casual workers who make up one-fifth of the Australian workforce, knowing your options can really help.
As we’ll discuss, there are many ins, outs and niches of getting car loans for casual workers…
We take a look.
Why are car loans for casual workers tough?
Basically, it’s the perceived lack of assurance that the loan will be paid back. Or, in other words, the fear that because most casual workers are not under contracts like full-time or even permanent part-time employees, they might not get enough hours / income in the future.
Your employment can also have a bearing on your interest rate.
This means that the loan might not get paid - or that’s the fear that lenders (eg. banks) generally have.
To make car loans for casual employees easier, we've put together a checklist specifically for casual employees to help you successfully secure vehicle financing when you need it.
Criteria for car loans for casual workers
Here's a list of what you'll likely need to prepare to be eligible for a car loan.
Showing that you are able to save money over time can demonstrate that you will be able to repay the loan. Lenders look favourably on people who can save money over time, even if it’s just a little bit.
2. 3 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.
Generally, you’ll need at least three months minimum employment documented with the same employer.
3. Minimum income
Some lenders may require that you have a minimum annual income to provide car loans for casual workers. This can vary between lenders. You can show your annual income with previous years tax returns or payslips.
Note that cash in hand work can be very difficult to prove and prove that it’ll continue in the future.
4. Good credit history
Like all loans, credit history is a huge factor. 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 car loan as a casual worker.
Show that you have enough additional income to make loan payments. This means that after you subtract your living expenses, there’s enough surplus money left over each pay cycle to make the new loan repayments.
6. Working minimum hours
Some lenders require that you work a minimum number of hours each week, for example 25 hours per week. This can increase your likelihood of being able to afford your casual work loan repayments.
Note that in some cases you might need a letter from your employer or other documentation to show that you work these minimum hours and it’ll continue into the future.
Tips for getting a casual employment car loan
The reason that lenders are usually 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.
This can cause problems for the lender as they’ll struggle to get their money back but also it’ll mean big problems for a borrower. Missing loan repayments, especially if it’s continuous, can make it very difficult to get a loan in the future.
For example, if a student gets a car loan as a casual worker and they default on repayments due to lack of work, it can affect their chances of getting a home loan in the future. It might also mean they need to return the vehicle to the lender.
Of course, nobody, including the lender, wants to see this happen. Some people look at lenders as scary corporations, but remember, they’re businesses and like all businesses, they want to offer premium customer service.
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 repay car loans for casual workers.
- Use a car finance broker so you have access to more lenders in one place
With access to a huge range of bank and non-bank lenders, a car loan broker is a specialist who'll use their expertise to match your financial profile to a lender. This means you have access to lenders you may (likely) never have heard of - Australia has dozens of niche lenders other than the big four banks.
- 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.
Each time you submit a formal application, it’s recorded on your credit report and can knock down your credit score. In other words, don’t shop around yourself for the best loan product - let a broker do the heavy lifting for you, it can save a huge amount of stress.
- Consider a personal loan rather than a secured car loan
In some cases, it can be easier to get 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 used car
Buying a used car 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. You can browse vehicles from private sellers online too.
- Consider a joint application or co-borrower application
If your partner has permanent or full-time work, or a family member is willing to act as a co-borrower, it 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 the ‘big 4’, do offer car loans for casual workers, but it does pay to consider non-traditional bank options which may provide a better deal.
These are often known as niche lenders and can offer some excellent alternate options for car loans for casual workers.
- 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.
Car loans for casual workers at the end of the day
Generally, if you’re over 18 and have a sufficient income, you can get a loan - it just depends on whether a lender agrees that you can and will make the repayments.
This may be oversimplifying things, but getting an idea of what needs to be done is a good beginning on the road to car loans for casual workers.
At Positive Lending Solutions, we often find that clients who have tried to ‘go it alone’ prior to contacting us, struggle. It means they’ve submitted applications to banks that they are familiar with only to be declined, which reduces their credit score and chances in the future.
Start with the Positive team, you’ll be glad you did!