Obtaining car finance in Australia as a holder of a 457 visa (Temporary Skill Shortage Visa) can be a bit more complex than for permanent residents or citizens, but it is certainly possible. The 457 visa is a temporary work visa, which can make lenders cautious due to the uncertainty surrounding the length of your stay in Australia. However, with the right approach and financial planning, 457 visa holders can still secure car finance. Here’s what you need to know about car loans on a 457 visa in Australia.
1. Visa Status and Lender Considerations
When applying for car finance in Australia as a 457 visa holder, one of the first things lenders will assess is the type of visa you hold. While the 457 visa provides a pathway to permanent residency, it is still a temporary visa, which can raise concerns for lenders about the length of your stay in the country.
Lenders prefer applicants with long-term stability, such as permanent residents or citizens. However, 457 visa holders with a stable job and income can often overcome this barrier. Lenders may be more willing to approve your loan if you’re employed in a full-time, long-term position and can prove that you have the financial means to repay the loan.
2. Proof of Income and Employment
One of the most important factors in securing car finance is providing evidence of a stable income. Lenders want to be sure that you can meet the regular repayments throughout the term of the loan.
For 457 visa holders, the most critical factor is stable employment. You’ll need to show payslips, bank statements, and possibly a letter from your employer confirming your full-time employment status and salary. The more solid your employment history and income, the higher your chances of approval. If you have a job that is in high demand or on the Skilled Occupation List, lenders may be more confident in your ability to repay the loan due to the security of your employment.
3. Credit History and Score
Your credit history and credit score will play a significant role in your car loan application. Lenders in Australia generally rely on your credit score to determine your ability to repay the loan. If you have been in Australia for a while and have established a good credit history, this will help your application.
However, if you’re new to Australia and haven’t yet built a credit history, getting a car loan may be more challenging. Some lenders may consider your financial situation, employment status, and overall income over your credit history, but they may charge a higher interest rate as a result of the perceived risk. If your credit history is limited, it may be helpful to start building it by applying for small loans or credit cards and paying them off on time.
4. Deposit and Guarantor
Offering a larger deposit can improve your chances of securing a car loan. A deposit of 20% or more of the vehicle’s value can lower the lender’s perceived risk and help you qualify for better loan terms, including lower interest rates.
Another option to consider is applying for a car loan with a guarantor. A guarantor is typically an Australian citizen or permanent resident who agrees to take responsibility for the loan if you are unable to make repayments. This additional security can increase the likelihood of loan approval. However, it’s important to understand the legal implications for both you and your guarantor before proceeding.
5. Specialist Lenders for 457 Visa Holders
While major banks like Commonwealth Bank and ANZ may have stricter lending criteria for 457 visa holders, some specialist lenders focus on providing car finance to temporary residents. These lenders understand the challenges that come with a temporary visa and may be more flexible in their approval processes.
Lenders such as CarLoans4U and Savvy cater specifically to people on temporary visas, including 457 visa holders. While the interest rates may be higher than what is offered to Australian citizens or permanent residents, these lenders often provide more customized solutions to suit the unique circumstances of temporary residents.
6. Leasing as an Alternative
If you’re unable to secure a traditional car loan, car leasing could be an alternative option. Leasing typically involves lower upfront costs, and the terms are often more flexible than a standard loan. With leasing, you pay a fixed monthly amount to use the car for a specified term, after which you return it.
Leasing agreements can be easier for temporary visa holders like those on a 457 visa to qualify for, as the lender isn’t exposed to the same level of risk as with a car loan. Additionally, leasing agreements often include maintenance and insurance, which can be convenient for those who are new to the country.
7. Understanding Additional Costs
Before applying for a car loan, it’s important to fully understand the costs associated with owning a car in Australia. Besides your monthly loan repayments, you’ll need to budget for car insurance, registration, maintenance, and fuel. The overall cost of owning a car can add up quickly, so it’s crucial to ensure that the loan and associated costs fit within your budget.
Conclusion
Getting car finance as a 457 visa holder in Australia is achievable, but it requires careful planning and understanding of the lending criteria. By proving stable income, offering a larger deposit, and potentially applying with a guarantor, you can improve your chances of securing car finance. While traditional banks may have more stringent requirements, specialist lenders and leasing options provide alternative routes for temporary residents. With the right preparation, you can secure a car loan and enjoy the flexibility of having your own vehicle while working in Australia.
DISCLAIMER
The information provided on this website is general in nature only and has been prepared without considering your financial needs, circumstances and objectives and should NOT be construed as financial, taxation or legal advice. For more information, get in touch with our experienced partner brokers today.
