Car Loans for Casual Workers

Find out why non-permanent employment isn’t a barrier to car loan approval.

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, updated on June 30th, 2023       

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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.

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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.

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.

Frequently asked car loan questions by casual workers

How much can I borrow?

This is determined by a variety of factors, including your credit history and rating, income and job stability and the value of the car you’re looking to buy. Your loan sum will always be tied to this, as previously mentioned. Ultimately, though, what you can borrow will be shaped in large part by what you can comfortably manage on a month-to-month basis.

What happens if I find permanent employment during my loan term?

There are several options you can pursue if you end up finding permanent employment during your loan term. If you have the means to do so, you can pay above the minimum requirements to have your entire amount repaid ahead of its scheduled end date (which can be done free of charge with some lenders).

Alternatively, you might look to refinance your car loan to access a better interest rate, which is likely to be available with greater job stability. You shouldn’t do this straight away, though, as your lender will want to be certain that your new employment lasts beyond your probationary period.

Should I buy a new or used car?

If you’re casually employed and on a relatively low income, you’re more likely to be approved for financing for a used car than a new one. This is because they’re typically substantially cheaper and are available from a wider range of sellers, from used car dealerships to private sellers. As long as it fits within the 20-year age cap at the time of purchase, you can get approved for a used car.

If you earn enough to support the payments of a new car, though, you can often enjoy lower interest rates and greater peace of mind that the car hasn’t been driven prior.

How does overtime pay factor into my application?

Lenders will of course consider factors like overtime and penalty rates when assessing your application but will view these as part of an average over time, noting that they don’t occur regularly. You’ll need to be able to demonstrate a consistent period of income inclusive of these other payment types if they’re to be counted in your regular income. For example, your penalty rates can be included if you demonstrate that you work every Sunday at your place of employment.

How are car loans different from other loan types?

Car loans generally refer specifically to an amount of money borrowed for the purpose of purchasing a car. Whilst personal loans can be applied to many different needs, car loans are less flexible. In this way, they’re like home loans, in that they’re both used exclusively to buy the asset they’re named after.

In comparison to personal loans, which they most closely resemble, car loans come with lower interest rates and higher borrowing ranges due to being secured in nature. This means that the car that you’re buying also acts as an added safety blanket for your lender in the unlikely event you become unable to fulfil your loan obligations.

Can I use a personal loan to buy a car instead?

Yes – unsecured car loans are available to borrowers who want to add further flexibility to their financing. As outlined in the previous question, these come with higher interest rates and cap your spending at $50,000. However, they’re quicker and easier to be approved for, with settlements available within 24 hours, and sidestep the age caps lenders place on car purchases.

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