As a temporary worker having safe, reliable transport is necessary! Whether you’re driving to a job or running errands, having a car makes life so much easier. Unfortunately, buying a car can be complicated and expensive especially if you’re a temporary worker.
Due to their erratic work schedule, temporary workers may not be approved for car loans as readily as other people. This doesn't mean that you cannot buy a car if you have a temporary job. Your financial documents, such as your payslips and bank statements, need to reflect your ability to afford the loan repayments. Additionally, you should exhibit good spending habits and try to save for a large deposit.
A temporary job can be thought of as part-time employment, or fixed-term employment. You would be employed for a pre-decided period of time or as your employer requires.
A temporary job is different from owning your own business and can be different from being a freelancer as well. Freelancers can sometimes operate more like a small business rather than as temporary or ‘gig’ workers.
Freelancers and business owners can get car loans, however, they may be subject to additional affordability tests. This may involve submitting additional salary slips or financial records to prove that they will be able to afford the repayment every month.
Most major lending institutions offer car loan programmes. This includes Absa, Standard Bank, Nedbank, and Wesbank.
Whichever lender you choose to go with, make sure that they are registered with the National Credit Regulator and are offering you the best possible deal. Many lenders offer personalised interest rates and, in some cases, flexible repayment terms.
You should pay careful attention to the interest rate you are offered, your repayment period, balloon payments, and penalties. Comparing quotes from at least two or three lenders can give you an idea of how much you should be paying in instalments.
Getting approved for a car loan as a temporary worker depends on how much you earn, how likely you are to have a steady income and your financial situation. Some temporary workers may have other jobs lined up as soon as they finish their current job, while others have to wait for days or even weeks to find another employment opportunity.
When applying for a car loan you will be asked to submit your bank statements as well as your salary slips. The bank will use this information to determine if you can afford a car loan. Typically you will need the latest three to six months of bank statements and payslips.
Whilst banks and other lending institutions may not stipulate that temporary workers do not qualify for loans, temporary workers may be less likely to be approved. As a temporary worker, you will have to prove that you will have enough disposable income every month to afford a car. This includes car loan repayments, insurance, running costs, and maintenance.
To increase your chances of being approved for a car loan, you can work on improving your credit score and your spending habits. Building a good credit score by maintaining your existing lines of credit and keeping your current debt to a minimum.
To improve on your spending habits, you can draw up a budget and track your expenses and income. This will help you adjust your spending and possibly even start saving for a deposit on your loan. Having a bigger deposit decreases your loan amount, which means you pose less of a risk to the bank.
To apply for a car loan you must be over the age of 18 and provide your South African barcoded ID, valid driver’s license, latest payslips, latest bank statements, and proof of residence.
If you are a foreign resident, you may also need to provide a valid work permit, passport, and an international driver's license. Be sure to check the requirements and documents you will need to submit before you begin an application. It's best to speak to a trained consultant at your local bank about the loan application process and how you can improve your chances of being approved as a temporary worker.
If you have the time, making multiple loan applications can be useful. This way you can compare quotes, and you may have alternative options if you are not approved by a lender. You should also speak to a consultant at the bank or lending institution about your borrowing options.
However, if you are not approved for a car loan you may want to assess the reasons why your application was denied. Are you borrowing beyond what you can afford to repay? Will you be able to afford the running costs and insurance for a car? Should you look into getting a personal loan instead?
Any responsible lender will not approve a loan that you cannot afford to repay. Be wary of lenders who do not conduct any background or affordability tests before making you an offer. Additionally, be wary of lenders who are not registered with the National Credit Regulator.
There is also the option of saving up and buying a car in cash. Depending on how much you can save, this may take a while and you will still have to make alternative transport arrangements in the meanwhile.
Whilst a car is a convenient mode of transportation, it is also much more expensive than using public transport. A vehicle is also a depreciating asset, meaning that it decreases in value over time. Don’t be alarmed! This just means that you need to be careful when investing in a vehicle because, because you likely won’t be able to resell it for the same price you bought it for initially.
Buying a car is a big step in life! Luckily, BudgetGist is here to keep you informed and make the right choices. We are South Africa’s information hub for all things related to finance and money.
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