More than 20% of the Australian workforce is casually employed. This can often mean fluctuating work hours and no personal leave entitlements.
Both factors can make take-home income hard to predict and make it slightly more difficult to get approved for a personal loan.
However, there are plenty of lenders who provide cash loans to those with casual income; there will just be some additional criteria to meet.
In this article, we will discuss why lenders treat casual employment differently and what you can do to present your personal loan application in the best way possible.
How Lenders Assess Casual Income
Lenders will gladly consider casual income when assessing you for a personal loan, as long as you meet their minimum requirements for employment tenure.
You also need to earn enough to comfortably afford the loan repayments on top of your existing living expenses.
Not all lenders will be available to you.
For example, some traditional banks often have strict, long-term tenure requirements and may not consider casual income as reliable enough for unsecured cash loans.
However, Gusto Cash often lend to those who are employed casually.
Why is Casual Employment Treated Differently?
Your employment status is an indicator to a lender of how reliable your future income may be.
A full-time employee is paid a flat salary that is predictable month after month and has additional job security mandated by law.
Compare this to casual employment, where your hours may fluctuate week to week and your shifts could be reduced without notice.
This is why there are additional criteria you will need to satisfy.
1. Consistency of Income
If you can demonstrate consistent income over a long period of time, lenders will be able to assess your capacity to repay the loan with far more accuracy.
Earnings that fluctuate wildly from week to week may indicate you are a higher-risk borrower.
2. Personal Leave Benefits
Full-time employees receive paid annual leave and sick days, which ensures a financial safety net.
Casual workers, on the other hand, are entirely reliant on the hours worked to generate their income.
The lack of leave entitlements means lower earnings if you fall ill or take a holiday, which lenders must factor into their serviceability calculations.
Minimum Requirements for Casual Employee Cash Loans
Before you apply for a fast cash loan, you will need to meet a few baseline requirements.
Minimum Tenure in Current Job
The longer you are in your current job, the more options will be available to you.
Most lenders will need a minimum of three to six months, but some will make exceptions if you have worked in the same industry long term.
So if you have just started a new job, there may still be options available to you.
Proof of Consistent Income
The more consistent your income, the easier it will be for a lender to calculate your average earnings.
Lenders have a legal responsibility to only give loans to those who can afford to repay them.
If you recently had a period of extended unpaid leave, your assessed earnings could be much lower than your actual hourly rate suggests.
Gusto Cash will look at your last 90 days of bank statements, and potentially your year-to-date earnings to make sure you are given a fair assessment.
Minimum Earnings Thresholds
Some lenders have a minimum annual income requirement for casual employees.
However, if your average income proves you can afford to repay the loan in addition to your existing expenses, you will generally pass this assessment.
Improve Your Personal Loan Application While Working Casually
Your employment type is only one factor that a lender will consider.
You can give yourself the best chance of being approved by demonstrating positive financial habits elsewhere.
1. Make Sure Existing Loans Are Up to Date
If you are currently in arrears on any existing loans, most mainstream lenders will not approve a new personal loan for you.
You may still be eligible for a fast cash loan in some circumstances, but your chances of approval will always be higher if you are up to date elsewhere.
2. Avoid Excessive Short Term Payday Loans (SACCs)
Any type of wage advance service or Small Amount Credit Contract (SACC) can be seen as a red flag.
It signals to a lender that your casual income is not reliable enough to support your regular budget.
Avoid these short-term loan products entirely if you plan on applying for a larger personal loan.
3. Reliance on BNPL
Frequent use of Buy Now, Pay Later (BNPL) services can also be a sign you are struggling with cash flow.
While some use is fine, if you are in an endless cycle of BNPL use to make ends meet you may not be able to show that you can afford the repayments on a new loan.
However, using the loan to consolidate your debts and close BNPL and Wage Advance accounts could be a positive change.
4. Regular Payment Reversals on Bank Statements
Payment reversals and dishonour fees are a sign that you are not keeping up with your existing direct debits.
You will also be wasting a lot of money on unnecessary bank fees.
Until you get this under control you should not be taking on extra credit.
However, a few reversals due to one off issues is not going to tank your application. But you will need to explain what happened.
No reversals at all in the last 90 days will always be the the stronger position to apply from.
5. Surplus Cash Each Pay Cycle
While you don’t need a deposit, or savings, for a personal loan like you may for a house, a visible cash buffer in your savings account demonstrates that you have surplus funds.
It proves you can manage your budget responsibly despite the fluctuating nature of casual work.
Frequently Asked Questions
How do lenders calculate my casual income?
Lenders will typically review your last 90 days of bank statements and calculate either an average, or minimum expected income you’ve received. If your hours fluctuate heavily, they could base your borrowing capacity on this average, or the lowest pay period depending on the reasons for the fluctuation.
Can I get a personal loan if my casual hours recently dropped?
It will be more difficult. If your hours (and income) have recently trended downwards, a lender will likely use your new, lower earning capacity to assess your affordability, which may reduce the loan amount you qualify for.
Do I need to provide payslips if I am casual?
Gusto Cash will look at 90 days of bank statements to verify your earnings. In some cases a payslip is used to compare year-to-date earnings if there has been a recent variation in your take home pay due to a one off event.
Does working multiple casual jobs help?
Yes! If you hold two or more casual jobs and the income from both is consistent and deposited regularly into your bank account, lenders will combine these income streams to calculate your overall borrowing power if they meet the minimum tenure thresholds.
Apply for a Cash Loan Today
Not all lenders treat casual employment in the same way, and submitting multiple applications to strict traditional banks can needlessly damage your credit score.
If you are a casual worker seeking a MACC personal loan between $2,001 and $5,000, the team at Gusto Cash is here to help.
We understand that the modern workforce is flexible, and our assessment process looks at the bigger picture of your financial health.
If your casual income is consistent and your budget is under control, you have options.
