Personal Loans for Casual Workers in Australia
In Australia, there are roughly around 2.5 million casual workers. And if you’re one of those casual workers, getting a low rate personal loan might prove difficult. Although difficult, it isn’t impossible – there are still lenders that are willing to provide you with a personal loan. If you’re planning on applying for a personal loan, doing some research is of importance.
How does a Casual Worker Differ from a Part-Time Employee?
- Have a 38-hour workweek or less
- Works regular hours
- Have the same benefits as a full-time employee would
- Are under contract or permanent employees
- No set amount of work hours.
- Often works at irregular hours
- Has a higher hourly rate compared to part-time and full-time employees
- Not entitled to company benefits
Why is it hard to get a personal loan as a casual employee?
The answer is – security. As a casual employee, you have unstable hours and income due to the volatility of your job. Your pay and working hours may be good today, but it may not be the same next week. Lenders will always value stability as it indicates one’s ability to repay the loan. This may even be a problem if you’re looking to consolidate loans
Another factor that affects your ability in applying for a personal loan is your lack of benefits or company entitlements. Which means you have no paid leave – which means no salary if you need to take time off of work, which will affect your ability to pay your loan.
Why is it harder to get a personal loan as a casual employee?
Most lenders would like it if their person there lending to is in full time employment or has a full-time income as they would get better repayment rates.
- Unstable hours and income – This aren’t a problem for every lender but there are certainly some that won’t lend based on the fact there isn’t a guaranteed payment date or amount each month.
- Lack of paid entitlements – One of the main factors a lender will point out is the alck of company benefits like sick leave. This puts the lenders level of risks up a fair amount.
Even though this is the case it doesn’t mean that every lender won’t lend to you so don’t panic there is hope.
Things casual workers need to know about getting a personal loan
A casual worker loan application varies slightly from that of a full-time employee. As a casual worker looking to apply for a personal loan or multiple loans, you need to know the following before even attempting to apply for one.
Lenders often see casual workers as high-risk borrowers. And as such, you’ll have a slightly higher interest rate compared to that of the low-risk borrower – this is to compensate for the risk that lenders are taking for lending you money.
Lenders know that the income of a casual worker is very volatile and can vary from week to week. Instead of looking at your monthly salary, lenders may instead assess how much you’ve earned over the course of three months. And from there, lenders can get a rough estimate of how much you earn annually.
If you can in one way or another, prove to the lender that although you’re a casual worker, you have a consistent income – then your personal loan might have a higher chance of getting approved.
As with any loan applicant, you are required to present various types of documents to show the lender that you are eligible for a personal loan. Documents may be different from lender to lender, but the following ones are the most common:
- Valid ID’s. Preferably government issued ones.
- Any form of proof of income.
- Bank and Credit Card statements
Tips on How to Get a Personal Loan as a Casual Worker
- Apply only when you’re a casual worker for over a year. This way, lenders won’t see you as a high-risk borrower if you’ve been working for the same company for over a year. Another great reason why you need to do so is that if you’ve been a casual worker for a company for over a year, you get the right to ask for a part-time position.
- Try and get help from your employer. A simple letter ensuring that you’ll retain your position will help tons for your loan application.
- If you have existing loans, pay them on time. This applies not just to casual workers, but to anyone who is planning on applying for loans in the future.
- Your lenders will you as less of a risk if you’re able to provide a bank statement stating that you have money saved up.