Car Loans for Childcare Workers. Part Time Is Not a Problem

Early childhood education is heavily part time and heavily award based, which means the assessment turns on consistency rather than on a large salary. Lenders evaluate several factors for educators.

• Income stability: your employment status and income are key. Lenders look at your payslips, your employment history, and whether your income is consistent. Full time, part time or casual, demonstrating a stable income stream is what matters.
• Credit history: your credit score gives lenders insight into past borrowing behaviour, and a good history can improve your chances and lead to more favourable rates.
• Living expenses and debt to income: current commitments including rent or mortgage, other loans and living expenses are assessed to determine capacity to comfortably repay.
• Loan amount and vehicle type: the amount borrowed and the age and value of the vehicle are also considered.

The two main ways educators work lead to two different finance paths.

Centre based educators are employed, so the application runs on payslips and bank statements in the usual way. Assistants, room leaders, diploma qualified educators and directors are all assessed on the same consistency test, with part time hours assessed at their real value.

Family day care educators are frequently self employed under an ABN. That opens up a chattel mortgage, where you own the vehicle from the outset and the lender takes a mortgage over it as security, which can offer tax benefits for eligible businesses. It also means the evidence changes, with tax returns or business records taking the place of payslips.

If you sit across both, working casually at a centre while also operating an ABN, both income streams can be presented, with each one evidenced over the same period.

Three structures cover most educator applications.

Secured car loans use the vehicle you are purchasing as collateral, which can often result in lower interest rates than an unsecured loan because the lender holds security. For an educator with a stable income, this is usually the starting point. Unsecured car loans use no asset as collateral, which offers more flexibility if you prefer not to secure the car, but rates may be higher to compensate for the increased risk and eligibility often requires a strong credit history. Chattel mortgages apply where you hold an ABN, as described above.

Eligibility criteria apply to all of them, and comparison rates vary between lenders.

• Gather your documents. Identification, proof of income such as payslips or tax returns if self employed, and bank statements.
• Know your budget. Work out what you can realistically afford each month, including insurance, registration and maintenance.
• Check your credit report. Obtain a copy to understand your standing and identify any issues before a lender sees it.
• Consider a deposit. It reduces the amount borrowed, potentially lowering repayments and overall interest.

Simple Loans holds Australian Credit Licence 509582 and is a member of AFCA. This page is general information and does not take your personal circumstances into account.