Even with over two million casually employed workers in Australia, casual employees still find it difficult to be granted loans. Most lenders see casual employees as having a higher risk of defaulting on their repayments. The good news is it’s not impossible to get car loans for casual workers.
As a casual worker, you may have to pass a few extra requirements and go through additional steps. But it’s nothing too complicated. In this guide, we outline everything you need to know to get a good car loan while casually employed.
Frequently asked questions about car loans for casual workers
Before we dive into the how's of getting a car loan, let’s answer some of the most common questions casual workers have when it comes to loans.
Can you get a loan with a casual job?
The simple answer is yes! Of course, you can get a loan with casual income. But you may need to provide additional documents like proof of savings. These will help assure lenders that you can make your loan repayments on time and in full. You will be required to show proof of employment when you apply for finance. Many lenders will require you to be with the same employer for at least 6 months (and/or have at least passed your probation).
Generally, having earnings that are more than the required minimum income criteria set by the lender will give you a better chance at getting your loan approved.
Are there any special car loans available for people with a casual income?
Provided you meet the lenders application criteria (such as minimum credit score, age, employed for more than 6 months, etc.), the majority of lenders will allow casually employed customers to apply for their normal car loan products, like they would any other customer (i.e., customers employed full time).
It depends on the lender whether or not there are car loans specifically for those with casual income. You can opt for a personal loan instead as an alternative.
Some lenders’ minimum criteria for a personal loan are less strict. All you need to do is show that you earn a regular income, or meet their minimum annual income requirements. For example, some personal loan terms and conditions state you must be “in regular paid employment” but there is flexibility within the criteria.
A personal loan is an unsecured, less restrictive type of loan that can be used for purchasing a car or other purposes. Aside from a personal loan, you may opt for a range of commercial car finance solutions for individuals and companies seeking finance for vehicles to be used in the business.
What is the maximum loan amount I can get with a casual income?
The maximum loan amount you can get with a casual income depends on the type of loan and the lender. There are lenders who offer up to $100,000 while most lenders provide between $40,000 to $50,000.
Interest rates also depend on the type of loan and lender. Loan interest rates aren’t typically higher for casual income borrowers compared to others. Before going through any loan application, take time to look at different lenders. Ask about the type of loans they offer and how much you can get as a casual worker.
Can you get pre-approved for a loan with casual income?
Borrowers who are casual employees can still apply for a pre-approved loan. Doing so can help you gauge whether you’ll be successful in your loan application. And if you do get pre-approved for a loan it will help strengthen your loan application case.
A pre-approved loan can also help you set a budget so you can start shopping for your dream car without worrying about whether you can afford it.
How to get approved for a car loan for casual workers
Now that you know the basics, it’s time to start applying for your loan. Read on to learn the ins and outs of applying for a car loan while being a casual employee.
What documents do you need to provide for a car loan with a casual income?
Usually, you’ll need the following documents when applying for a car loan. Make sure to have these ready beforehand to ensure your loan application goes smoothly:
- Identification – IDs, birth certificate, passport, or any other proof of identification.
- Proof of income – For casual employees it could be payslips, bank statements, transaction listing, your PAYG payment summary, tax return, or a tax assessment notice.
- Proof of employment – An employment letter or employment contract.
- Details of loan security – Assets of value to guarantee a loan in case you’re unable to repay. In most cases, this will be the vehicle you intend to purchase using the car loan funds.
Discuss with your lender if there are other requirements you need in addition to those listed above. The best way to secure any loan is to be prepared.
How long does it take to get approved for a car loan for casual workers?
Car loans usually take as little as four days to get approved. It could take longer depending on factors like your credit history, income, and identity verification. Speed up your application by ensuring you have all your documents ready.
Keep in touch with your lender or representative so you know the status of your ongoing loan application.
Can a co-signer or guarantor help me get a car loan with a casual income?
If a lender is still on the fence, you may be able to get a loan co-signer or guarantor to accompany your loan application, provided your lender allows this.
A loan guarantor is generally someone who will provide a ‘back up’ guarantee on your loan, and agree to make your repayments for you if you default on your loan. Whereas a loan co-signer, or joint applicant, is someone who will submit an application along with you for your loan, sharing the loan responsibility equally.
A loan guarantor or co-signer may be a family member, a close friend, or someone willing to do you a favour. Your guarantor will be the one liable for paying the loan amount the moment you default on your repayments.
How to improve your chances for car loan approval
If you want to increase your chances at loan approval as a casual employee, make sure to follow these top tips:
1. Avoid multiple applications
All your loan applications are noted as credit history. Therefore, applying to numerous loans and getting denied can affect your loan chances negatively. Lenders consider it a red flag if multiple applications are rejected.
2. Consider a used vehicle
A smaller loan is more likely to get approved because lenders see less risk especially in the case of casual workers. This means choosing a used vehicle which is cheaper than a new one could help your loan get approved.
Not sure whether to get a brand new car or go second hand? Read our helpful article about buying a new versus a used car.
3. Save a bigger deposit
One way for lenders to minimise loan defaulting risk is by imposing a bigger deposit. This way, the lender can expect lesser costs to recuperate from a default. Thus, making a deposit 10 to 20 per cent higher can mean the difference between a loan’s approval or denial, even when you are casually employed.
4. Have a good credit history
Make sure your credit history is free from any errors. With a solid credit history, you’re more likely to get approved for a loan because it shows lenders that you won’t be a liability.
What else should you consider?
Loans vary widely and the most suitable loan type for you depends on these important factors:
- Interest types and rates. It is important to determine whether a fixed or variable interest type suits you best. If you would like more certainty over your repayments, a fixed interest rate may be a good option for you. But, if you’re looking for flexibility on your loan, a variable rate loan may be the way to go. Make sure you do your research to ensure you are getting the most bang for your buck when obtaining car finance
- Repayment types and loan terms. As a casual employee, your income may be considered unpredictable. When looking for a car loan, use your base pay at your minimum working hours as a guide when considering your repayment types and loan terms.
- Have a keen eye on other fees. These could be establishment fees, account-keeping fees, redraw fees, late payment fees, and insurance fees. Checking on them will help you decide if the loan is a good fit for you. It is also helpful to check if early payment rebates apply for the loan term.
Get a Car Loan with Aussie
With these tips, you can set your self up for success when applying for a car loan to secure your dream car. Easily apply for car financing with Aussie Car Loans! We can help find the best car finance product with a competitive rate that will suit your financial situation.
Wondering how much you can borrow from your income? Check our Loan Repayment Calculator to understand more about our car loans and repayment. You can also call Aussie Car Loans at 1300 889 669 or enquire online to get help from one of our experts.