Did you know that millions of Australians rely on car loans to purchase a vehicle?

Though several people apply for a loan from banks and other lending institutions, there is never a guarantee that the loan application will be approved. A shaky job status might make this more complicated. 

During the finance application process, lenders consider several factors in determining if one can qualify for the loan. When applying for a car loan, one of the most important factors is your employment status.

If you want to apply for a loan, but your employment status is unclear, here is what you need to know about getting a loan and the factors that determine eligibility.

Credit Status

Your credit history and current credit status are one of the leading factors that most lenders consider. Regardless of your employment history, you can either have bad or good credit.

If you have good credit, the lender will also look at how long you have been employed. If you have bad credit, they can focus more on your terms of employment.

Note that the guideline and approval rate is different for every job status. However, if your job status is valid, you may still get a loan even if you have bad credit.

Lenders consider if your income is increasing or has a likelihood to increase. Several lenders consider different types of employment status’ including seasonal and part-time employment.

Income Status

Though the lending institution retains rights to the car, they still need proof that you can pay for it. Consequently, they look into your employment status to know if you have a steady, regular, and stable income.

If you have a job with regular pay but have a lot of deductions, this may negatively affect the approval.

Your Line of Work

Lenders also consider the industry you are involved in and your particular field of work. For example, if you are an accountant and have worked with one employer for several years but you changed to another, the lenders will note it.

Because of the nature of this kind of work, they may need to know why you switched employers.

Other Sources of Income

Showing an extra source of income can increase your chances of approval. However, you will have to describe the source. This can be benefits such as annuity or child support.

If the source of income is legal, your car loan provider can consider it.


Though this is not mandatory in a car loan application, you can increase your chances of approval if you have a cosigner. There are lenders who may require you to have a consigner when applying for the loan.

Types of Employment

There are various ways in which one can be employed. These types of employment status’ can determine if you qualify for a car loan.

Apart from steady full-time employment, here are more details on the different types of job status that lenders consider.

1. Part-Time

Depending on the amount of loan, your car loan can cover several years. Since part-time employees do not have job security, it can be challenging to prove that they can support the monthly payments.

Traditional financial institutions such as banks do not favour part-time employees. Part-time employees do not have the same benefits as full-time employees, and they carry a huge amount of risk.

However, some lenders can still approve the loan depending on the credit score. If you need a car loan, you can also improve your chances of approval by working more hours.

When you do this, your income may be higher than average, and banks and other lenders can be convinced to approve the loan and may even give you a larger loan.

Note that you will also need to show proof that you have been at that job for a minimum of two years. Lenders may also require you to give them the most updated tax returns.

2. Self-Employment

Self-employment is a valid job status in Australia, and at least 16.32% of Australians are self-employed. Whether you are a consultant, contractor, or are in business, you need to be in your position of employment for at least two years before applying for a loan.

Lender use tax returns to evaluate how suitable a self-employed candidate is. In case of instability, they will also consider your credit history and business potential. However, not every type of business or industry is the same.

Your type of business has a substantial effect on your loan approval. Before applying for the loan, you may want to learn more about the risks involved in your industry and your chances of approval.

Choose a lender with few requirements and a high-approval rate.

3. Contract Jobs

Contract employment includes freelance, company contracts, PAYG contracts, and subcontracts. Freelancers mainly consist of young people working on an output basis.

Freelancers complete a specific job in the IT, tech, or education sector on a website and move on to the next job.

Not to be confused with company workers, company contracts employed have individual registered businesses. They are subcontracted or outsourced to different companies and agencies.

On the other hand, subcontractors handle jobs such as mining and oil rigs. They work for long stretches and can also work on commission.

Lastly, pay-as-you-go (PAYG) terms of employment include workers who have fixed terms with various agencies. They enjoy the same benefits as full-term employees, and their taxes are also taken care of.

This gives them an added advantage. Financial lenders evaluate all these types of employment to determine stability and risk. If your nature of work puts you at a disadvantage, it may be challenging for you to get the loan you need.

Note that regardless of your employment status, employment gaps such as taking months away for treatment, switching from one job to another, and more will also influence your approval.

Nevertheless, since every lender is unique, get to know how your current job status will affect your finance application and the terms you qualify for.

Finance Application and Job Promotions

If you get a promotion during the application process, you can verify the new terms of employment with your HR office and update the lender. Such a change in employment can positively influence your loan terms.

However, if you get a higher-paying job with a different employer when you have already applied for the loan, the terms with the lender may change.
New employment contracts have several contingencies.

This includes background checks, drug screening, medical checks, and more.

If you meet the requirements, you may still have to go through a probation period before you are confirmed as a full-time employee. During your probation, your pay may also be slightly limited.

Such factors can delay the loan application process. In some cases, you may not meet a lender’s requirement of at least two years in employment.

How Much Can You Borrow?

Every lender has a limit to how much you can borrow. This largely depends on your credit score and job status. Before giving a loan, lenders consider:

• Your total income
• Current investments
• Expenses
• Existing debts
• Saving

Once they evaluate all this, they will present you with the amount they can offer. Lenders often want to determine that you can pay the loan and meet all your monthly expenses without compromising your wellbeing and livelihood.

Some lenders, especially traditional lenders such as banks, may also evaluate your habits, interests, and lifestyle to know your spending habits.
The way you spend money can put you at risk.

For example, if you are a gambler, you may have more questions to answer.

Change of Employment Status After Approval

Usually, several lenders verify employment status’ at least ten days before approval. But what happens if you lose your job after that?

It is impossible to predict the future, and anything can happen after you get the loan.

If you quit or lose your job after approval, you risk losing your car, especially if you do not have any other source of income. Talk to your lender to know how best to secure your car and keep up with the payments.

Consider Your Job Status When Applying for a Loan

Though buying a new car is fun, you need to show proof that you can make your monthly payments on time. This is why your employment status is vital to your finance application process.

It is challenging to get a car loan without employment, so choose a lender that can accommodate your current job status.

Are you wondering how to get a loan with your current job status? At C1 Finance, we understand every situation and consider several factors when assessing your application.

With us, you will get a fair assessment regardless of your credit history. For more information, get in touch with us today.