If you are looking to buy a car and need a loan, you may believe that banks will say “no” to you because you are not a citizen or permanent resident.
This is because you do not have a credit file. In Australia, every citizen has a credit file or credit history. It records all the times they have tried to get a loan, how much the loan was for, and if they have been rejected. It is too complicated for an Australian bank to get a Filipino record (or any other kind of record) so they do not want to take on a risk they are unable to make sense of.
For those of us in the Aussie-Pinoy community – and there are 304,015 of us – who are new to Australia, getting around with public transport can be unreliable. We might have a deposit saved up for a car, or maybe fund it with a big deposit, but can’t take the extra step because we have trouble getting a car loan.
Even if you do not have your residency yet and are on a working visa, there are some options out there you can take out.
Temporary working visa Holders
There are over 35,000 temporary working visa holders in Australia and 2,310 work in construction and 410 in transport – which means having a car is necessary.
If you have a temporary working visa (subclasses 489, 495, 496, 475 or 487), it is best to apply for this type of loan as soon as you hit the ground in Australia. Many lenders will approve a special loan for a work visa holder that finishes before your visa expires.
This is a traditional car loan where you pay off the amount each month until you pay it off. At the end of the loan, you are free to sell the car when you return home or keep the car if you are granted residency.
The most common loan you can get as a migrant is a secured car loan. A secured car loan means your car is tied to the loan – sort of like a home loan. Though it can be riskier for you, you are given lower interest rates compared to non-secured or unsecured car loans.
How to look for a good deal
With any loan, you need to figure out how much you can afford to pay each month in repayments. A car in Australia comes with costs such as fuel, registration with the government, and comprehensive car insurance. Registration or “rego” as it’s called can run as high as $700-800 per year in some states.
You should look at your income and deduct your expenses each month. This should give you a figure of what’s left over. Make sure you can still leave some left over for emergencies.
In Australia, car loans will have fees such as account keeping fees. These are not considered part of the loan unless you see something called a “comparison rate.” If your car loan shows a comparison rate, that means most of the fees are included in the percentage. This means you can compare one with another directly.
You should use a car loan calculator to get an idea of how much a car loan could cost. You will need the amount you want to borrow, the interest rate (or comparison rate), and how long the loan will last (the loan term.)
Looking around for a good car loan deal can be time-consuming and confusing if your English is not strong. That’s why it’s best to approach a car loan broker who can also speak your language. A car loan broker helps you find a car loan from many different lenders on your behalf instead of looking at them yourself.
Remember to protect yourself
Savvy CEO and migrant finance expert Bill Tsouvalas says that recent migrants should watch out for “dodgy” or “predatory” lenders. “There are a lot of disreputable people trying to take your money in huge fees and big interest rates. If you are a migrant and need a car loan, always look for a lender or broker with an Australian Credit Licence. If they don’t at least have that, then you need to walk away.
“You should also avoid payday loans and other types of short-term high-interest loans. These are designed for tiding people over to their next paycheque, not for big asset purchases like cars.
“Going to a bilingual or multilingual broker or lender is always a good idea, especially if you are unfamiliar with English.”
Feature image: Photo by form PxHere
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