If you have a permanent job, and therefore a guaranteed monthly income, it can be fairly straightforward to obtain the necessary finance for a car purchase. But what happens if you are in a fixed-term position? Can you get a car loan with a temporary job? In short, some lenders will accept applicants that are working in temporary roles but other factors are usually taken into account too.
Other factors lenders will consider
If lenders are happy to lend to temporary workers - in principle at least - they will also take other factors into account when considering an application for car finance, just as they do with those in permanent employment.
Any lender will check the applicant’s credit score before agreeing to any kind of loan. Therefore, if a temporary employee has a great credit rating, this will work in their favour.
The applicant’s income will obviously have some bearing on the loan amount and type available. Again, as with permanent employees, the higher the wage, the more you are likely to be able to borrow. Someone on minimum wage, for instance, would never be offered as much as a worker earning more than double that amount.
If you have other borrowing, this will affect the amount you can take out in finance. The lender has to be confident that you can repay the loan, so if you have other demands on your income they are likely to want to lend you a smaller sum. Existing debt may also affect your credit score.
Whether you have a deposit, and how much, will also influence the lender’s decision. The higher the percentage of the price you can pay at the outset, the better your chances of securing finance – and obtaining a favourable rate of interest.
If you have a mortgage, the bank or building society you deal with are more likely to agree to a loan, assuming you have a good repayment record with them. Other lenders may also consider this a factor in your favour.
What counts as a temporary job?
You may be in a permanent job, and therefore assume that it will be relatively easy to get car finance, but this isn’t always the case.
Many jobs are subject to the completion of a set probationary period, and the job is not classed as permanent until this time limit has been reached and the employee deemed satisfactory, in terms of factors like attendance and performance.
The probationary period often lasts for a number of months – often three or six. At this point the employee’s record will be considered before permanent employment is confirmed.
On the other hand, someone may be working in a temporary job, which means that little or no notice may apply if the job is to end or they are to be dismissed for other reasons. Where many permanent jobs are subject to a notice period of one or even several months, a temporary worker may be given a week’s notice – or even as little as a day.
This particularly applies if the employee is working for a variety of different companies during their time as a temp. For example, as office temp may do a couple of days as an administrator for one company, then go to work somewhere completely different the following day. They might then do the same job for weeks, months, or even years, or they may only work there for one day.
There are increasing numbers of temporary and contract workers, as well as those on zero-hour contracts. This means that lenders have come up against this scenario before, and will know what they are willing to offer. This can depend on a number of other factors.