When applying for a car loan, casual employees often find themselves at a disadvantage because many of them can’t provide a PAYG payslip with consistent income due to varying weekly hours. Some casual workers receive a higher wage than full-time employees due to factors such as casual loading, which compensates them for benefits unavailable to them, such as paid leave. However, since they have no guarantee of continued employment, lenders tend to need more assurance from them that they can repay the loan. Casual workers who can prove they’ve been consistently employed and receiving wages for a considerable amount of time are likely to get a more favourable response from lenders.
Can you get a car loan with a casual job?
You can get a car loan on a casual job, but you need to check whether you meet the conditions set by lenders. You can also look to improve your chances of getting approved for a car loan by, for example, applying with the bank where you have a savings account. Many lenders may expect that you’d have been casually employed for at least six months to one year. If you’ve been working with the same employer for this time, getting a letter from them confirming your employment can help strengthen your case. Also, your earnings should exceed their minimum income criteria.
Lenders may ask you for proof of savings, which can tell them that you can set aside money from your income for loan repayments. This can be crucial if your wage payments are irregular and don’t allow you to regularly put away money every fortnight or month. Remember that lenders will typically use their calculations to estimate your income and ability to meet repayments. If you choose to buy a more affordable car, enabling you to borrow less, you may qualify for the loan more easily. You’ll also be able to borrow a smaller amount if you can accumulate savings for a few months to use as a deposit.
You can also check your credit score before applying for the car loan as an excellent credit score may help to convince lenders that you are a responsible borrower. You should look at improving your credit score if it is an average score. Having your car loan application rejected can affect your credit score and, as a result, the chances of future applications being approved. If you don’t have a high credit score and aren’t sure of how much you can afford to borrow, you may want to see if any lenders will offer a pre-approval. Although this isn’t a guarantee that you’ll get the loan, you can at least find out the loan amount that may be offered to you by the lender and plan your car purchase budget accordingly.
Do lenders offer special car loans for casual workers?
Lenders may not offer car loans specifically tailored for casual workers. On the contrary, they may see casual workers as being more at risk of defaulting or not repaying the car loan. They may try to offset this risk by charging you a higher interest rate on the loan or otherwise making the loan more expensive. Consider comparing car loan offers from different lenders and checking not just the loan fees and interest rates but also the documentation required and the repayment options offered. You can speak to one or more lenders if you find them offering suitable options.
If you can’t find a suitable lender, or you find that your chances of getting approved for a car loan are low, you needn’t lose heart. You can get advice about applying for a secured personal loan instead of a car loan, which involves using the car you’re buying as security. If you’ve taken out a home loan, you may be able to redraw from the mortgage to cover the cost of a car. This may also get you a lower interest rate given that home loan mortgage rates are currently lower than the rates for car loans. However, it’s important to understand that a home loan term is typically many years longer than a car loan term, so it would likely mean paying a significant amount more in interest charges over the life of the loan.