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Being a casual or part time employee doesn’t disqualify you from a personal loan, but there are a few things you should know before you apply.
Personal loans for casual or part time workers can be harder to get your hands on. If you don’t have a full time job, lenders might see you as a higher risk borrower - even if you’re working full-time equivalent (FTE) hours. However, if you’re in casual employment, it is still possible to be approved for a personal loan.
In this article…
- What’s the difference between casual and part-time employees?
- Why is it harder to get a personal loan as a casual or part-time worker?
- How much do you need to earn?
- Tips to strengthen your application as a casual employee
- Tips to strengthen your application as a part-time employee
- How to apply for a personal loan as a casual or part-time worker
- What if you can’t get a personal loan?
What’s the difference between casual and part-time employees?
Despite seeming like similar terms, there are technical definitions separating the two.
What is a casual employee?
If you’re a casual employee, this means you have no guaranteed hours - even if you always work the same shifts every week. Casual workers are usually paid at a higher hourly rate than part-time and full-time employees, but are also not entitled to sick leave, annual leave or any other type of leave. Essentially, if you don’t work, you don’t get paid.
What is a part-time employee?
If you work part-time, you’re very similar to a full-time employee, but you work fewer hours. Full time work generally means at least 38 hours per week or 7.5 hours a day. Part time employees typically still have set work days and hours, just less than 38 hours. You’re entitled to the same benefits as full-time employees (sick leave, annual leave, other leave) but on a pro-rata basis, so your benefits will reflect the hours you work.
Why is it harder to get a loan as a casual or part-time worker?
There are a few main reasons casual and part-time employees may have more trouble finding a personal loan.
Casual workers work fewer hours
When you work on a casual basis, you don’t have guaranteed hours each week. This means that your income could fluctuate, which can raise the risk factor for your lender. For part-time workers, if you’re not working enough hours to pay off the loan you applied for, you can run into trouble.
Casual workers don’t have paid leave
Another risk for the lender is if you get sick and need time off work, or even go on a holiday. If you’re a casual worker, no work means no pay. This can be troublesome if you have a personal loan you need to pay off, because even if you don’t work one week, you’ll still need to make your regular repayment.
Even though you’re entitled to some benefits as a part-time employee, depending on how much you’re working/earning, you may not have much leave saved or available. If you need to take unpaid leave, you may struggle to make your personal loan repayment/s. This makes you a riskier prospect in your lender's eyes, because you are more vulnerable to unforeseeable circumstances like illness or redundancy.
How much do you need to earn to take out a personal loan?
With most of the risks being around your income, you may be wondering how much you actually need to earn to apply for a personal loan. Minimum income requirements can vary from lender to lender; some may require you to earn $30,000 per year while others don’t have a minimum requirement at all. But it should be noted that lenders without an income requirement are likely going to assess applications on a case-by-case basis, as well as charge higher interest rates.
How much you need to earn will also be influenced by how much you want to borrow. Basically, your lender needs to make sure that your repayments are affordable. This is what they will do when they assess your application; they look at your income, expenses, assets, liabilities and so on to calculate your borrowing power. Your income is just one part of the equation.