Securing car finance as a student visa holder in Australia can be challenging, but it's not impossible. While lenders may view student visa holders as higher-risk borrowers due to the temporary nature of their stay, there are options available to help you finance a car. Here’s what you need to know about financing a vehicle with a student visa in Australia.
Understanding the Challenges
As a student visa holder, you may face more stringent lending criteria compared to permanent residents or citizens. Lenders are generally cautious when approving car loans for temporary residents because they may not stay in Australia long enough to fully repay the loan. However, there are still avenues to explore if you need to finance a car during your studies.
The key factors that lenders typically assess include your income, employment status, credit history, and the stability of your visa. Your visa type and how long you’ve been in Australia may also impact the lender’s decision, as a longer visa term often signals more stability.
Proof of Income and Employment
One of the most important requirements when applying for car finance in Australia is proving that you have a stable income and employment. As a student visa holder, you’re likely working part-time while studying, which can demonstrate your ability to make regular loan repayments.
To improve your chances of approval, provide recent payslips, bank statements, and a letter from your employer confirming your work hours, job stability, and income. If you work full-time during breaks, or in a stable part-time role, lenders will feel more confident that you can repay the loan.
Establishing or Using Your Credit History
Credit history plays a crucial role in determining whether you’ll be approved for a car loan. Visa holders, especially those new to Australia, may not have an established Australian credit history, making it more challenging to secure financing.
However, some lenders may be willing to consider your overseas credit report if you’ve lived in another country and can provide documentation of your credit history. For those new to Australia, building a local credit history is an essential step. You can start by using an Australian credit card, paying your bills on time, and ensuring that your financial obligations are met consistently.
Securing a Larger Deposit
One way to improve your chances of getting approved for a car loan as a student visa holder is by offering a larger deposit. A larger deposit lowers the loan amount, which reduces the lender's risk. For example, offering a deposit of at least 20% of the car's purchase price can make your application more attractive to lenders.
A larger deposit not only reduces the loan amount but can also help you secure a lower interest rate. This will ultimately lead to lower monthly repayments, making the loan more affordable during your studies.
Choosing the Right Lender
Different lenders have different policies when it comes to financing car loans for visa holders. While major banks may have stricter criteria, there are specialist lenders who cater to international students and temporary residents. These lenders may offer more flexible terms, considering factors like stable employment or a good overseas credit history.
Lenders such as CarLoans4U, Auto Finance Online, and Savvy specialize in helping international students and temporary visa holders secure car loans. These lenders may be more likely to offer competitive rates and flexible terms.
Consider Using a Guarantor
If you are struggling to secure a car loan on your own, you might want to consider using a guarantor. A guarantor is someone, typically an Australian citizen or permanent resident, who agrees to take responsibility for the loan if you are unable to make payments.
Having a guarantor with a strong credit history and stable financial standing can increase your chances of loan approval and help you secure better loan terms, including a lower interest rate.
Leasing as an Alternative
If you’re not able to secure a car loan, car leasing could be a good alternative. Leasing a car typically has more flexible approval criteria compared to traditional loans, and it can be easier for student visa holders to qualify for. Car leases generally involve lower upfront costs and shorter contract terms, which may better suit a student’s budget.
At the end of the lease, you can either return the car, extend the lease, or buy it outright. Leasing gives you the flexibility of driving a car without committing to a long-term loan.
Conclusion
While financing a car as a student visa holder in Australia can be more challenging, it’s certainly possible with the right approach. By proving your income stability, offering a larger deposit, and choosing a lender that caters to temporary residents, you can improve your chances of securing car finance. If a loan proves difficult to obtain, consider leasing a vehicle or applying with a guarantor. With the right financial preparation, you can drive away in a car while studying 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.
