Car Loans for Casual Workers
Find out why non-permanent employment isn’t a barrier to car loan approval.
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Car loan options for casual workers
Car loans for casual workers are becoming more common in Australia. More than two million Australian workers are considered casual. Generally, a casual worker is defined as an employee that works on an “as-needed” basis. More specifically, a casual employee works non-guaranteed (and often irregular) hours and has no commitment from their employer about length of employment term.
There are lenders who are willing and able to work with you if you’re in this position and approve you for your car loan. Learn about how to get approved as a casual employee here.
Car loans for casual workers explained
How do I qualify for a car loan as a casual worker?
There are several key points that you must meet in order to be considered eligible for car financing. The following factors will weigh heavily on your lender’s ultimate decision as to whether to approve your application:
Your income
A rule that applies to all types of car loans is the required minimum income to qualify for a car loan. Lenders will set this at no lower than an annual total of $26,000. This isn’t required to wholly be derived from your casual employment: many lenders will also accept certain types of Centrelink income, including:
- Age pension
- Disability support pension
- Veterans’ Affairs pension
- Carer payments
- Single parenting payments
- Family tax benefits
Government benefits such as Youth Allowance, Austudy and Abstudy aren’t considered eligible, as they’re more conditional payments that can run out at short notice. For example, Youth Allowance payments end once you reach a certain age (either 21 or 24, depending on whether you’re looking for full-time work or studying full-time).
Your consistency of income
On top of this, you must ensure that your hours and, as a result, your income remain stable for a substantial period in the lead-up to your car loan application. Lenders will look to see evidence of consistency of income because they want to be as certain as possible that there won’t be anything standing in between your ability to repay the loan in full.
For example, you might earn $30,000 in the 12 months prior to your application, but your chances of approval are far slimmer if your work over that time was inconsistent and variable. This application is less likely to be successful than that of a casual employee who earns less but has worked the same hours each week over the past year.
Your length of employment
As mentioned, lenders want to steer clear of handing money to risky borrowers, which also extends to the length of their employment. You’ll be required to have been in the same place for a minimum of six months prior to your application in order to be considered eligible for financing.
Because casual workers can have their employment terminated with little to no notice, which isn’t the case for other employment types, lenders view applicants with longer stints at their current job as being safer. It wouldn’t be wise to lend to a young adult just starting their first hospitality job, for instance, as there’s nothing stopping things from going pear-shaped and resulting in their sacking.
Your age and residential status
Finally, you must also meet the basic eligibility criteria that apply to all car loans. Applicants must be 18 years or older at the time of applying and are required to hold Australian citizenship, permanent residency or, in some cases, an eligible visa. These are considered the basics when it comes to car finance, so you should ensure you fit into these categories before applying and being rejected outright.
How do I know which car loan is right for me?
When considering any of the above car finance options, you need to take into account your own personal circumstances. Loans differ greatly, and which loan is the best fit for you depends on a number of important factors:
- Interest rates
- Interest type (whether fixed or variable rate)
- Loan term
- Repayment types and options
- Fees (establishment, account-keeping, redraw, late payment, early payment)
- If the lender also requires you to pay insurance
A low interest rate may seem appealing at first, but it also might not necessarily mean that you will be saving money over the entire loan term. You will need to carefully consider all these different points together and determine what will best suit your financial and lifestyle situation.
As a casual worker, you especially need to carefully consider your repayments. Given your hours may change, and you are not eligible for holiday leave pay or sick leave pay, this can make your income potentially unpredictable. You should always use your base pay, at its lowest rate, as your guide when looking at a car loan. Ask yourself if you can afford these repayments even if you are only working your minimum hours.
What’s the best way to find the right lender?
Conducting research into lenders is important when you are looking into applying for a car finance. The lender industry is competitive, and it can be often be confusing to navigate with so many different lenders and loans out there. The entire process can be very daunting and time-consuming and leaving you concerned that you have not made the right decision. Borrowing money is not something people tend to do lightly, and you should make sure you are able to come to a decision that you are happy with.
Savvy is constantly up to date with all the current loans and lenders out there. We can assist you to make sure that you find the right loan and we can save you time in doing so.
How do I apply?
Before you apply for a car loan, you will need to be able to confirm whether you want pre-approval before locating your car, whether you wish to find a car first, or whether you have already located a car to buy. This information is essential for lenders to know in order to make sure they can offer the best possible car loan for you.
You can apply for a car loan online. This process is usually quite fast, with lenders often beginning to contact you with offers within a few hours after submission of a completed form. Lenders may occasionally need to clarify additional information with you before making an offer of a car loan.
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Tips for maximising your car loan approval chances
Apply for a smaller loan
The greater the loan sum, the greater the risk to your lender and the less likely you are to be approved. Opting for a cheaper car to finance, or not requesting a loan worth 100% of its purchase price, can help increase your likelihood of being approved.
Work towards improving your credit score
Your credit rating also plays a major role in determining both your approval chances and your interest rate. Applicants with poorer credit histories will attract higher interest rates to partially mitigate the risk their lender takes on. By paying off any outstanding debts and lowering the limits on your credit cards, you can increase your credit score.
Don’t apply for multiple loans at once
Even if you need a car loan desperately, the scattergun approach is never the right one. Applying for many loans in quick succession will show up on your credit file and can potentially decrease your likelihood of approval with other lenders.
Apply with your partner
If you happen to be living with a partner, adding their income to your application is a highly effective way to maximise your approval chances. This is because the level of risk is decreased by shifting the reliance from one income to two, easing the burden on you and leaving your loan with a contingency plan if one stream runs dry. This can also lower your interest rate and increase your borrowing power.
