Casual employment is common in Australia. You could be a parent balancing child-minding with working, a student studying at university or TAFE, or simply working in an industry with fluctuating labour demands.
While many people choose casual employment because it suits their lifestyle, it does make it harder to get approved for a loan. This is because lenders view casual workers as more risky; they have a greater chance of not making a repayment.
Working casually doesn't exclude you from getting a car loan, but you may be required to provide more evidence of your ability to repay the loan.
How do I know if I'm a "casual" employee?
Here are some ways to tell if you are employed casually. Casual employees:
Do not have a permanent employment contract
Are not paid for sick leave or annual leave
Typically work irregular hours
Can have their employment terminated at any time, by either party
Receive a higher hourly rate to compensate for the loss of benefits
Work a minimum of 25 hours per work and receive consistent hours and pay.
Bank of Melbourne
Be over the age of 18 and a permanent Australian resident.
BankSA
Be over the age of 18 and a permanent Australian resident.
Bendigo Bank
Be in paid employment as subject to lending criteria.
Cando
Be over 18 and employed.
CommBank
Be over the age of 18 and earn at least p.a. after tax.
IMB
Have been in your current role for at least 12 months.
Latitude Finance
Earn at least p.a.
loans.com.au
Your eligibility will depend on your individual circumstances and loan purpose.
NAB
Have a good credit rating and earn a regular income or wage.
NRMA
Be able to provide evidence of a regular income or wage.
RACQ
Earn an income that's sufficient to manage your loan repayments.
St.George
Be over the age of 18 and a permanent Australian resident.
Westpac
Have been in the role for 12 months or more.
How can I get approved for a car loan if I work casually?
Check the minimum eligibility criteria. Regardless of the type of employment, loans will generally have a minimum income requirement.
Don't apply until you have worked for a couple of months. Check with the lender to see if they have any requirements for how long you must have worked at your current job. It may be up to a year.
Apply for less than what you can afford. You might need to settle for a cheaper car so that your repayments will be well below the theoretical maximum.
Get a letter from your employer. The more evidence the lender has that your employment is stable, the better.
Try with your existing bank. This is especially true if you have borrowed from it before and have never missed a repayment.
Demonstrate your ability to save. Having a deposit and a long savings history is a great way to show you are reliable.
How do I know if I can afford a car loan on a casual income?
Regardless of your employment status, you should always work out how much you can afford to repay, and therefore borrow, before taking out a loan. To do so, use a simple repayment calculator like the one below to get an estimate of your likely repayments. All you need to do is enter the amount you wish to borrow, the interest rate and the length of the loan.
Loan Repayment Calculator
*Whilst every effort has been made to ensure the accuracy of this calculator, the results should only be used as an indication. They are neither a recommendation nor an eligibility test for any product and should not be construed as financial advice, investment advice or any other sort of advice.
Is there anything else to consider before I apply?
First and foremost, you should consider how stable your employment is. Just because someone will lend you money doesn't mean you should necessarily borrow it. Try talking to your employer before taking out a loan to get an idea of the chances of your employment ending.
You must also consider whether the loan you are applying for is right for your circumstances. There are many car financing options available and a huge number of providers. Compare different options to work out which one will give you the best value.
Finally, don't apply for a loan that you are ineligible for as it will be marked on your credit history. Talk with the lender to make sure you are fully eligible before applying.
Here are some of the top questions casual workers ask about getting a car loan:
Will I have to pay more because I am a casual employee?
Not necessarily, but in practise, probably. As a casual worker you will most likely be deemed as riskier and so have less access to the lowest-cost products. However, if you have a long, clean record of borrowing and repaying money, an existing relationship with a bank and a decent income from casual work, you very well could be approved for a no fee, low rate loan.
What if I work for multiple employers casually?
Having multiple jobs is not necessarily a bad thing in terms of getting a car loan. In one way, it makes you a less risky customer as you have a more diversified income. You will need to prove your total income and all your places of employment. Having a long history of regular hours and income will help.
What will happen if I stop working?
You are required to pay back your loan, regardless of your employment status. Make sure you have a little bit of extra money to make the minimum repayments should you lose your job. Most lenders have some kind of financial hardship provision, so you should talk with your lender straight away if you think you will not be able to make a repayment.
Elizabeth Barry is the lead editor for Finder. She has over 10 years' experience writing about a range of topics with a focus on personal finance. You’ll find her writing and commentary in a range of publications and media including Seven News, the ABC, MSN, the Irish Times and Singapore Business Review.
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