Getting A Car Loan With Casual Employment?

jssr13 on 27/04/2021 - 21:49
Last edited 27/04/2021 - 22:25

Wondering if there’s any chance the banks and other financial institutions generally hand out loans to low-income, casual workers?

Would be after a $10,000 secured car loan..

Casual Job 1 - $12,000 per annum (before tax)
Casual Job 2 - $10,000 per annum (before tax)

Both are casual, but regular, in particular the second one which is basically fixed.

Living at home if that makes any difference.

Any chance of an approval with such circumstances, or straight up no? I’m aware there was a royal commission years ago which tightened things further..

I could pay in cash with my own savings but main rationale behind the loan would be to build a credit history/rating for future and more substantial loans like a mortgage. Not sure how relevant or important this is?

Financial Car Loan

Comments

  • Typical16-bitEnjoyer on 27/04/2021 - 21:56
    +7

    Nope.

    • jssr13 on 27/04/2021 - 22:03

      Is it primarily because they’re casual, or the crappy income? Or both?

      • Kangal on 27/04/2021 - 22:11
        +6

        Either.
        But together is an instant rejection.

  • kerfuffle on 27/04/2021 - 22:10
    +6

    If you're living at home, is it possible for your parents to lend you the $10K and you pay them back?

    Alternatively, you may need to settle for a second hand car rather than splashing out $30K on a new one. Don't take out loans on depreciating assets.

    • jssr13 on 27/04/2021 - 22:22

      I could pay everything in cash with my own savings, so wouldn’t really need a loan from parents. The rationale behind the loan is:

      1. Build a credit history/rating so that there’s something for when I take out a home loan in the future
      2. Would rather not see savings decline

      Not sure how irrelevant or stupid these justifications sound?

      • Unorthodox on 27/04/2021 - 22:26
        +20

        No such thing as "building credit history" in Australia.

        If anything the car loan will be looked at negatively because it's a liability and one that is on the more risky side as it's a depreciating asset.

        • jssr13 on 27/04/2021 - 22:49

          So do you need to have a credit history at all to apply for something like a home loan in 7 years time? Or it doesn’t really matter if it’s a blank canvas as long as there’s no bad history?

          • Ughhh on 27/04/2021 - 23:01
            +9

            @jssr13: They'll look at your income, bank statements (for savings and how you spend) and any debts, including car/personal loans which won't look good.

          • Unorthodox on 27/04/2021 - 23:06
            +2

            @jssr13: Credit history in Australia is essentially the assessor looking at your enquiries for credit and then enquiring if they need to clarify any issues or potential issues.

            You start to have profile from things like having a Post-Paid phone plan, utilities, credit cards, etc.

            A credit history in Australia is only there to show you're a normal person who has normal expenditures. Plenty of people go for home loans without it and that's fine.

            Is it good to show you can maintain your phone payments etc? Sure…

            Is it going to look good to have a car loan? Not with your circumstances… But will it be a major negative, also no (unless you miss payments etc)

            • jssr13 on 27/04/2021 - 23:12

              @Unorthodox: Thanks. Yeah I wouldn’t have thought paying it off would be an issue since I’d only spend like $7k a yr, but if not having credit history isn’t that big of a deal, it definitely wouldn’t be worth the additional interest repayments on something that depreciates

              • trongy on 28/04/2021 - 08:42

                @jssr13: When I got my home loan, the only credit history I had was a credit card with a low limit that I paid off every month and a $29/month phone plan.

      • AfterDeals on 27/04/2021 - 22:27
        +4

        You would end up paying more with a loan, declining your savings in the future, whilst the value of your car goes down as it ages. Not to mention the on-road costs - rego, insurance, maintenance, petrol, etc.

        You can build a credit history with other financial instruments like credit cards. As long as you have a good, stable income, with no bad credit history, it's unlikely you will be denied a home loan.

        If you are worried about mortgage applicability, you should invest the money in yourself to increase your income for the future.

        • jssr13 on 27/04/2021 - 22:44

          Yeah good idea I’ll probably opt for a credit card to achieve that instead. Thanks

          • Ughhh on 27/04/2021 - 23:03

            @jssr13:

            I’ll probably opt for a credit card to achieve that instead

            Just be aware that being denied credit (card) and/or multiple applications may hurt your file.

      • gmail92 on 27/04/2021 - 22:32
        +2

        Both of these justification are silly because:

        1. Irrelevant at the current income levels since your ability to repay any loan is already minimal.
        2. But you would rather pay someone else interest rates? Personal loans have pretty high interest rates, even if secured, and definitely much higher than the interest you are getting for your savings in the bank.
  • jv on 27/04/2021 - 22:12
    +7

    Just save your money and pay cash…

  • bobbified on 27/04/2021 - 22:23
    +1

    The only chance you might have is if someone is willing to go guarantor on the loan.

  • dust on 27/04/2021 - 22:53
    +5

    Don't get a loan to buy a depreciating asset.

    • pegaxs on 27/04/2021 - 23:08

      But I want it NOW!!!

      • MS Paint on 27/04/2021 - 23:19
        +2

        BuT I wAnT iT nOw!!!

        FtFy

    • kungfu_tofu on 28/04/2021 - 04:09

      what if OP is buying an appreciating asset though i.e a jdm exotic

  • AustriaBargain on 28/04/2021 - 00:22

    Get your parents to buy you the car, if they can afford it or have the credit, with the car itself being "collateral" against the loan from them. Can you afford the insurance though to cover your parents if you ever total the car? If you're young I bet insurance isn't cheap. Also do your parents like you?

  • lachhelix on 28/04/2021 - 01:21
    +1

    If it's any help, I managed to get a 16k secured loan with a 5% interest rate in very similar circumstances to you about 5.5 years ago with no problem.
    Whether lending criteria have changed or not since then - unsure.

  • Hardlyworkin on 28/04/2021 - 05:57

    Looks like Ozbargain has saved OP from making a poor decision. Now to shop around for a used Carolla….

  • Jugganautx on 28/04/2021 - 06:24
    +3

    Getting a loan for a 10 grand car when earning less than the dole… 0%chance.

    • jssr13 on 28/04/2021 - 07:21

      Perhaps it’s time to jump on the dole

  • onetwothreefour on 28/04/2021 - 07:48
    +2

    Any reason why you want to spend $10k on a car or half of your salary? Spend around $2k or less and pay cash, run the car into the ground for the next few years then upgrade if you can.

    • Croc2 on 28/04/2021 - 10:12

      He wants to spend $30k, not $10k 🤷‍♂️

    • jssr13 on 28/04/2021 - 12:40

      Because if I splashed $30k, then there would still be $50k left in savings so I didn’t see it as precarious situation. I see your point though.

      • onetwothreefour on 28/04/2021 - 13:08
        +1

        But $30k is a lot of money when you only have $80k, especially on a car.

  • vinni9284 on 28/04/2021 - 08:24
    +2

    Also to remember, the current car prices are jacked up by ~ 35% of its true value therefore banks wont want to use the car as security for the loan.

  • Drakesy on 28/04/2021 - 11:23
    +1

    Get a cheap car ~$3-5k
    Buy it outright.

    Friends don't let friends take out car loans unless you really don't need the money.

  • netjock on 28/04/2021 - 11:42
    +1

    If you got $10k pay it with cash. A few hundred bucks in interest not worth it unless you have better things to do with that money.

    Ask Techlead he might be able to help you double it on bitcoin or some altcoin. Just don't blame it on me because I am not the expert on crypto.

  • Avada Kedavra on 28/04/2021 - 20:46
    +2

    Sooooo basically I used to work in car finance.

    Depends on how long you've worked in each job for.

    As a general rule of thumb, anything casual less than 12 months will need a verbal employment check (usually your manager or the individual that hired you) alongside a set of 60-90 days bank statements (depending on financial institution).

    Note that casual income is also scaled down to 80% to factor in time off you would take for annual or sick leave as you don't receive these entitlements under casual employment.

    Living at home definitely makes a difference as your expenditure is likely to be a lot lower than that of the household and expenditure method (HEM) that each financier uses (varies from place to place). Worst case scenario is that they take the minimum HEM from whatever category you sit in, i.e. single applicant living with parents or de-facto living with parents blah blah blah.

    The most difficult part about getting a loan, given your situation is the 2 casual jobs, most financiers (I assume) wouldn't want to take on that type of risk/exposure given the nature of casual employment, BUT, that being said, if you've got a god tier financial position, that is, very good savings position that can be proved (not lump sum payments like super redraw that most people did last year lol) or are asset backed, then that gives the financier a little more comfort in possibly giving you a chance.

    But if you're looking to spend $10K, what most people have suggested before me here is probably better mate, get something you can pay with outright in cash, you don't want to be tied down to any debt especially since you are working 2 casual jobs.

    Note: this is not financial advice, just my insight from previously working in auto finance.

    • Avada Kedavra on 28/04/2021 - 20:50

      oh and to add on to this, if you've got a shocker of a credit report, your chances of getting finance are very slim, i.e. you've been to cash converters or any other third tier lender for an 'enquiry'.

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