Search and compare car loans for temporary residents

Car loans for temporary residents are essentially the same as car loans for permanent residents, but with stricter lending criteria.

Before you start your loan application process, it’s a good idea to review the type of car loan that best suits you. Temporary residents, if eligible, can choose between secured or unsecured car loans with fixed or variable interest rates.

Secured

Temporary residents are usually offered secured car loans, as these provide a higher level of security to the lender. This is because secured loans use the car being bought as collateral on the loan. If the borrower defaults on their loan repayments, the lender can repossess the vehicle to cover their losses.

Unsecured

It may be harder to find a credit provider that will provide an unsecured loan to a temporary resident. This is because an unsecured car loan represents a higher risk to the lender, as it may be harder for the lender to recover its money if the borrower defaults on the repayments. If, however, you have been living in Australia for several years, own your own home and have a high income, some lenders might grant you an unsecured loan.

Fixed rate

Fixed rate car loans have a set interest rate that does not change over the length of the loan. Non-resident loans often have shorter loan terms, so fixed rates can make it easier for the lender to calculate interest costs, and for the borrower to budget for repayments.

Variable rate

Variable rate car loans may be available to non-residents, but may not be as common as fixed rate loans. The interest rate charged might vary over the loan term, which could decrease or increase the cost of repayments. However, as temporary resident car loans often have shorter loan terms, this may not come up in every case.

Car loans for temporary residents represent a higher risk to lenders as you are in Australia temporarily. Even if you plan to stay for the long haul, the legal uncertainty of your residency can affect your car loan application.

This higher risk means lenders may apply stricter lending criteria compared to car loans for permanent residents. These criteria can vary from lender to lender, and are worth comparing before you decide which car loan is best for you.

Essentially, you need to prove you are a trustworthy and credible borrower. The exact eligibility criteria will vary between lenders, but will typically include your:

Income

Many lenders will require you to earn at least $50,000 per year from a regular income stream, such as a full-time job.

Australian credit rating

When applying for a loan, lenders will look at your credit rating in Australia only; overseas credit ratings will not be considered.

Visa length

Before you apply for a car loan, consider how long you have left on your visa. Car loan terms often last a minimum of two years, so if you have less than one year left on your visa, you probably will not qualify for a temporary resident car loan.

Visa type

If you’re on a student or working visa with a path to permanent residency, this could positively affect your application. However, if you are on a holiday or bridging visa with no expiry date, this could negatively affect your application. If you’re unsure of your visa type, you can check your status on VEVO.

If you have a bad credit rating overseas, Australian lenders will not consider this when assessing your loan eligibility. This means that if you have a good credit score in Australia, you may still be eligible for the loan. Paying bills on time via direct debit or making monthly rental payments can help improve your credit rating over time, which could in turn help your car loan application.

However, if you have a bad credit rating in Australia, it will be more difficult for you to get approval for a car loan. Remember that applying for multiple loans over a short amount of time could damage your credit score, affecting your ability to get the car loan you desire. Applying for more money than you need may also reduce your chances of a successful application, as a higher loan amount will mean higher repayments, which you may not be able to comfortably afford.

A non-resident's ability to get a car loan will depend upon the lender’s criteria, their visa and financial situation. However, there are a few steps non-residents can take to help improve their chances of getting a car loan before beginning the application process, such as:

Check visa expiry dates

Applying for a car loan when you have enough time left on your visa to account for a two to five-year loan term may improve your chances of approval. This is because the loan term for temporary residents always ends at least three months before your visa ends.

Proof of Australian residence

If you can prove that you are renting, or even own an Australian residence, you may have a greater chance of being approved for a car loan. Paying monthly rent and expenses from a savings account and providing bank statements to the lender is a great way to prove that you can meet loan repayments.

Do not breach your visa requirements

Working visas often come with certain requirements, such as restricting working hours and choice of employers. Many non-residents can only work with one employer, for a certain number of hours per week. If you breach your visa by either working more hours than stipulated or having multiple jobs, you may not be denied a car loan.

Save a cash deposit

Cash savings may help put borrowers in good stead when applying for car loans, especially when a deposit is needed and you must prove you earned it. If you can prove that these savings have been held in an Australian bank account as a result of receiving regular and stable income, this may put you in a better position to get your car loan approved.

Prove regular, stable income

If you receive a steady income in an Australian bank account, you may increase your chance of loan approval. Many lenders look for income earners over $50,000 per year, who earn regular income. Seasonal income, regardless of whether it amounts to a larger amount, is often viewed less favourably than continuous, regular income.

Before you decide which car loan is best for you, it’s important to compare the different car loans available, considering the following features:

Loan term

The loan term on a temporary resident car loan is usually restricted to ending no less than three months before the expiry date on your visa. As loan terms are often around two to three years, this could mean higher monthly repayments. Make sure you calculate your car loan repayments to ensure you can afford them.

Hidden fees

After you have reviewed the repayment amounts, you need to dig a little deeper to find the total cost of each car loan you consider. Many fees for car loans – such as application fees and ongoing monthly or annual fees – may not be immediately obvious. Make sure you read the Product Disclosure Statement (PDS) and any other documents before you agree to a car loan.

Flexibility

Some car loan providers offer flexible repayment options. For example, if you come into some extra money from a gift, inheritance, or tax refund, you could consider making extra repayments on your car loan, so you can pay off your car quicker than originally agreed. Keep in mind that some lenders charge early exit fees when borrowers repay their loans early, to recoup the interest you would have paid if you made repayments over the agreed loan term. Before you sign anything, make sure you read the fine print and check if you will be charged any fees for early exit or extra repayments.

Lender reviews and reputation

Once you compare the fees, term and flexibility of some loans, and you have a few options in mind, the next thing to do is a little online research. Search for consumer reviews about different lenders and the specific loans you want to apply for. Look out for third party review sites that are subjective, and not just the testimonials the lender features on their website.