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Car loans for part-time workers
How to secure financing when you don't work a typical 9-to-5 job.
Part-time employment is common throughout many industries, but you might find that it makes it harder to get approved for a car loan. While it doesn’t exclude you outright, you may be required to provide more evidence of your ability to repay than a full-time worker.
How do I know if I’m a considered a part-time employee?
There’s no specific rule when it comes to what type of work is considered part time. In general, you may be a part-time employee if:
- You don’t have a permanent employment contract.
- You aren’t paid for sick leave or annual leave.
- You work irregular hours or less than 30 hours a week.
- You receive a higher hourly rate to compensate for no benefits.
Which lenders offer car loans for part-time workers?
How can I get approved for a car loan if I work part time?
Working part time shouldn’t exclude you from a loan altogether, but it might make it harder to qualify for a lender’s minimum income requirement. Before you apply, follow these tips to help put yourself in a good borrowing position:
- Check the minimum eligibility criteria. Lenders generally have a minimum income requirement to ensure borrowers are able to repay their loans. You may also need to be employed for a certain amount of time, live in a certain state or meet certain credit requirements in order to qualify.
- Apply for less than the maximum. Just because a lender offers loans above $50,000 doesn’t mean you should apply. Assess your budget and only apply for the amount you can afford to pay back, even if it means settling for a cheaper or used car.
- Get a letter from your employer. The more evidence the lender has that your employment is stable, the better. Part-time employment may be considered risky, so having proof that you’ll be able to pay your loan in the future will help increase your chances of approval.
- Try with your existing bank first. Consider your car loan options with your current bank or credit union first. Already having an existing relationship can go a long way in upping your odds of approval. This is especially true if you’ve borrowed from them in the past and never missed a repayment.
- Demonstrate your ability to save. Having a large down payment ready and a long savings history is a great way to show lenders that you’re reliable with your finances.
- Apply with a cosigner. Asking your parent, partner or friend to cosign your loan can make borrowing less of a risk to the lender. This is because if you’re unable to afford repayments, your lender can contact your cosigner to pick up the slack.
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How do I know if I can afford a car loan on a part-time income?
Regardless of your employment status, you should always work out how much you can afford to repay — and therefore borrow — before taking out any type of loan. Applying for preapproval is a great way to suss out what rates and terms you might qualify for from different lenders.
Then, use a simple repayment calculator like the one below to get an estimate of your monthly repayments. Simply enter the amount you wish to borrow, the interest rate and the length of the loan to calculate how much you’d need to pay back each month.
3 questions to ask before you apply
When you’re all geared up to start your loan application, ask yourself these three questions first:
- Do I meet the lender’s eligibility criteria? It can’t be stated enough: You shouldn’t apply for a loan you’re ineligible for. It will be a mark on your credit report that could bring down your score. Check with the lender before you apply to make sure you’re fully eligible.
- What’s my biggest priority? Are you looking for a car loan you can get fast? Or one that requires no down payment? Asking yourself what’s most important can help you find a loan that best meets your needs.
- Is my job secure? Part-time work doesn’t necessarily mean you’ll be let go without notice. But before taking on any debt to buy a car, you should check with your employer to make sure you’re in good standing.
As a part-time employee, you likely know how difficult it can be to qualify for financing. While car loan providers typically require you to have a minimum income, there are ways to increase your chances of approval — from having a large down payment ready to providing a letter from your employer.
Compare your options with our car loans guide to get an idea of how much you can afford to borrow on a part-time salary.
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