Applying for a Car Loan While Unemployed
Getting An Unemployed Car Loan
When you are unemployed, it’s important to have a car to get to job interviews and increase your chances of getting your career moving again. You may think that it’s impossible to get a car loan while unemployed. Specially, when you don’t have any source of income at all. However, there’s lots of ways you can show the lender that you are able to make car loan repayments. As long as you can demonstrate this, you’ll be able to get a loan.
What income types can be considered?
Just because you don’t have your regular PAYG income coming in, doesn’t mean you don’t have some forms of viable income. Now is the right time to think outside the box. Find alternative ways to create an income stream.
If you are doing freelance work or working from home, this counts as income. Make sure that you keep a record of any income through your bank statements, eBay invoices, or however you record incoming transactions.
You may have rental income, or make a room available for AirBNB. Any income source that is regular can be counted towards your ability to pay a loan.
I’m about to start a new job – can I get a car loan?
Some lenders may consider you for a loan if you are about to start a new job. Make sure your employment contract and start date is already arranged. You’ll be more likely to be approved if:
- Your new job is in the same industry and a similar role to your previous position
- You’ve had a break between jobs of less than a month.
Once you’ve been in your new role for three months and completed your probationary period you should have no trouble qualifying for a loan.
How can I get approved for a car loan while unemployed?
Take out a loan with someone who has a steady employment income is another option. You will most likely be approved for a car loan while unemployed if you do this.
You may have income protection insurance either independently or bundled within your superannuation account, this can provide another source of income while you are between jobs.
Getting a car loan on Centrelink
There are some forms of Centrelink payments that can contribute towards your income for the purposes of a loan approval.
- Family Tax A and B
- Disability Support Pension
Unfortunately, Newstart Allowance isn’t considered acceptable income for a car loan application. If you aren’t sure whether you can use your Centrelink income towards a loan, then check with a car loan broker to find out which income types can be accepted.
Casual or contract work and getting a car loan
Australian employers will often hire employees as a casual, or for a fixed term contract. This enables them to control their employment costs, but it makes it a bit tricky for you if you are in and out of work as the demand for your skill set changes.
If you are in between roles right now, but you have a strong history of continuous employment, it’s a lot more likely that you’ll be approved for a loan.
Getting a loan in these work situations is definitely possible. Make your application stronger by supplying:
- Previous years tax returns showing your annual income
- Letter from your employer confirming their intentions regarding your employment
- Stable residential and loan repayment history
- Personal references with authority to speak about your past employment
Get a car loan pre-assessment
The lending market has become very competitive, with online lenders offering alternatives to the big four banks. This means that if you have an ‘alternative’ employment profile, it’s now more likely that there’s a lender who will recognise that you can afford to repay a loan.
If you’re not sure where the best place to apply is, then seek advice from a car loan broker. A broker stays up to date with the latest loan offers and changes to any lender policies, so if there’s a car loan that you are eligible for, they will be able to point you in the right direction.
The clear advantage of using a broker is that you will protect your credit rating as your broker will ensure that you don’t submit any applications for car loans that you don’t meet the criteria. This pre-assessment ensures that when you do meet the criteria, your credit enquiries won’t be a barrier to approval.
Applying for an unemployed car loan
If you decide to apply for the car loan with a joint borrower or cosigner, make sure to speak to the person you’re asking to cosign the loan for you before starting the application. This will give them time to seek advice and commit to helping you get a car loan.
If you can show that you can afford to make car loan repayments while you are unemployed, you can start your car loan application right away.