There are over 2.6 million workers who are casually employed in Australia. Unfortunately, a casual employment can make it more difficult to be granted a loan compared to holding a full employment. This is because of a casual employee’s perceived higher risk of defaulting repayments.
In general, a “casual worker” is described as a worker who is employed based on “demand”. To be more specific, a casual employee:
- Doesn’t have a permanent employment contract
- Doesn’t have specific work hours, and works irregularly
- Is not qualified to paid sick leaves or annual leaves
- Has no employment term commitment from an employer
- Can terminate employment, or by the employer depending on the agreement
If you are a casual employee don’t worry, it doesn’t necessarily means you are excluded from getting a car loan, you just have to produce more concrete evidence that you’re able to settle loan repayments. Here are some tips on how to get a car loan even if you are on a casual paycheck.
What loans can I get approved for?
Employment stability, salary, and work hours are the things that lenders are considering before granting you a car loan. Since casual workers are employed under more “unstable” employment terms, lenders are also more likely to turn down their car loan applications. Luckily, casual workers can get approved for a personal loan instead.
Some lenders’ minimum criteria for a personal loan just requires you to earn a regular income, or meet a minimum annual income. 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 for another purpose.
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 or for employees of the business.
What is a loan guarantor?
A borrower is advised to be accompanied by a loan guarantor whenever a lender is uncomfortable with the repayment capacity of the borrower, like in the case of casual employment.
A loan guarantor, or a loan co-signer, is someone who co-agrees to a borrower’s car loan repayment terms. A co-signer may be a family member, a close friend, or someone willing to do you a favor. Your guarantor will be the one liable for paying the loan amount the moment you default on your repayments. Hence, an utmost precaution is advised for you to avoid causing significant distress to a friend or a loved one for defaulting your repayments.
Tips on increasing chances
Lenders always gamble when they consider loan approval for casual employees. These lenders usually impose strict conditions that casual employees must meet before the loan application will be granted. Your longevity of employment, as well as overtime and penalty rates, will be taken into account to evaluate your chances of getting your loan approval.
However, some tips can increase your chances of getting your loan approved. Here are as follows:
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
Casual employees put the lender at risk when trying to borrow a huge amount. A smaller loan is often more feasible. Thus, considering a used vehicle that is less worth is generally a good idea. A smaller loan amount to purchase a cheaper used vehicle has higher chances of being obtained.
Not sure whether to get a brand new car or go second hand? Read our helpful article buying a new vs 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.
Things to consider
When planning to apply for a car loan, you need to consider your means and resources. Loans vary widely and the most suitable loan type for you depends on these important factors:
- Interest types and rates. Though a low-interest rate sounds like a good idea, it does not mean you’d be able to save more money over the entire course of the loan. It is also important to determine whether a fixed or variable interest type suits you the best.
- Repayment types and loan terms. As a casual employee, your income is considered unpredictable. When looking for a car loan, you must use your base pay at your minimum working hours as a critical guide for 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 finally purchase your dream car by easily apply for car financing with Aussie Car Loans, once application are back up and running. We can help find the best car finance product with a competitive rate that will suit your financial situation. Aussie can also give a pre-approval on your loan, so you can have confidence when shopping for your new car.
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 1 300 769 999 or enquire online to get help from one of our experts.
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