What is a Non-Resident Car Loan?
A non-resident car loan is a secured vehicle loan used by Australian non-residents on a temporary
visa. As non-resident visa holders generally don't have a credit history in Australia, greater importance is placed
on an applicant's deposit, income, and employment status when granting approval.
How does a car loan for a non-resident work?
A car loan for a temporary resident in
Australia works similar to a secured car loan. If you are approved for a vehicle loan as a
non-resident, a lender will allow you to borrow a sum of money needed to purchase a car, and you will make regular
repayments on the loan amount and loan interest over an agreed term.
The main points of difference between resident and non-resident car loans are:
- Car loans for temporary residents have shorter maximum loan terms
- Car loans for temporary residents cannot be extended beyond the end date of their visa
- Non-resident car loans require a lender to assess your application without access to your personal credit history
- The number of available lenders will be smaller — some may not offer any finance to non-residents, while others
may only offer vehicle finance on certain visas.
You can use the car loan calculator to estimate your repayments and compare various vehicle finance offers.
How to qualify for a car loan on a temporary visa
You can qualify for a non-resident car loan with the majority of lenders if you:
- Are aged 18 years or over
- Hold an eligible visa
- Have an Australian bank account
- Receive a regular stable income
- Can confirm your employment in Australia
An annual income of $50,000 or more is ideal for non-residents, as a higher income will indicate to a lender an increased ability to meet your regular repayments.
What you need to apply
Before you apply, you will need to organise some documents to submit alongside your loan application. As non-residents often do not have an Australian credit file, demonstrating an ability to repay the full loan amount is crucial. You may also be asked to provide:
- Proof of identity — e.g. passport or driver licence
- Proof of visa and details of expiry
- Proof of income — e.g. bank statements and payslips
- Proof of your assets — if any
- Details of any current debts and expenditure
Lenders view the expiry date of the non-resident visa as the maximum possible term.
How to apply
You can apply for a non-resident car loan with banks, non-bank lenders,
and through finance brokers. Most non-bank lenders allow applications for non-resident car loans to be submitted
As the approval process has stricter requirements for temporary residents than for Australian citizens or permanent residents, an online application is only a good idea if you are certain you:
- Have all the required documentation
- Are applying for finance you can prove you are able to repay
If you are unsure of your eligibility for a loan, you may wish to engage the services of a finance broker to help prepare your application and find the most suitable loan for your personal situation. Finance brokers will charge a fee for their services.
Making too many applications within a short period of time can negatively affect your credit score. This is particularly significant for temporary residents who generally do not have an established credit history within Australia.
How lenders assess applications
Lenders assess an applicant based on the risk they present as a borrower. Generally, lenders will look at the credit score of the applicant to determine their eligibility for a loan. As non-residents often do not have an Australian credit history, lenders will look at other factors, such as:
- Length of employment
- Type of employment
- Time in Australia
- Type of visa and its conditions or restrictions
- Length of visa and its expiry
- Value of deposits — if any
Some visas have restrictions, such as a maximum number of jobs or hours a visa holder may work. Even if you meet the income requirements, lenders will decline an application if you breach the conditions of your visa.
Why do lenders ask for collateral on non-resident car loans?
Non-resident car loans
use the purchased vehicle as security on the loan amount. This is reflective of the risk in lending to
temporary residents, and ensures the lender can recover the borrowed funds in the case of a payment default or
Security — also known as collateral — can include property, vehicles, and other high-value assets. For non-residents, it will almost always be the vehicle purchased with the loan.
Why are the terms shorter than other car loans?
A lender will not offer a loan term beyond the expiry date of your current visa. Lenders only consider your current visa when assessing an application, and will not take into account extensions or renewals. Most lenders will only offer loan terms with an end date at least three months before your visa's expiration.
Terms for Non-Resident Car Loans
|Minimum Term||Maximum Term|
|1 year||4 years|
How to improve your application and avoid being declined
Temporary residents are
considered as high-risk borrowers by lenders. If you meet the basic eligibility for a vehicle loan as a
non-resident, it is still a good idea to consider the ways you could strengthen your application and avoid being
Some common ways to improve your chances of getting approved include:
- Provide a cash deposit — A deposit minimises the risk presented to a lender, both in lowering your regular repayments, and in reducing the amount they may have to reclaim in the event of a default.
- Frequent, stable income — A frequent, stable income will make it easier for lenders to assess your ability to repay the loan amount. Some lenders may have difficulty in approving a loan for seasonal workers or non-residents receiving intermittent income.
- Ask a guarantor to co-sign — A guarantor is a personal pledge by another individual to take responsibility for the loan repayments in the event you are unable to meet your repayments.
- History of your Australian bank statements — Lenders look at your bank statements to determine eligibility for finance. This is to assess and confirm your income, how often you are paid, and any other debts which may affect loan repayments.
- Qualify for a path to residency — Visas with a path to potential permanent residency are often viewed
Temporary Skill Shortage (TSS) visa holders who have been working in Australia with the same employer for three years may be eligible to apply for Permanent Residency through the Transitional (TRT) Stream.
Non-resident interest rates
Interest rates for non-resident car loans will vary between lenders. Lenders will often apply interest rates on vehicle loans relative to your risk-level as a borrower. As lenders cannot use the credit history of temporary residents to assess risk, they will often calculate interest by considering:
- Your income level
- Your employment status
- Your deposit history
Interest rates for non-resident car loans will generally be higher than normal, to account for the increased risk presented to a lender.
Changes to Non-Resident Car Loans
Car loans for 457 visa holders will no longer exist from 18 March, 2022. This is because the Australian 457 visa was replaced by the TSS 482 visa in March 2018. A brief summary of the changes to 457 visa car loans is presented below:
- In April 2017, Australian Prime Minister Malcolm Turnbull and Immigration Minister Peter Dutton jointly announced the abolition of the 457 TSS visa
- From 18 March, 2018, it was replaced with the TSS visa (subclass 482), the new non-resident visa for skilled workers from overseas
- If approved, the visa lets you work in Australia for up to four years and allows travel to and from Australia until expiry
- Existing 457 visa holders can still apply for a non-resident car loan. As the maximum duration on 457 visas is
four years, they will be entirely abolished by 18 March, 2022.
Non-resident visas are granted for a period of up to four years, though for some occupations the maximum duration is limited to two years.
Non-Resident Car Loans Summary
Getting a car loan if you are a non-resident can be a
difficult and frustrating experience. However, if you take the time to understand the approval process, and properly
prepare your application, there are many options available if you meet lender criteria.
In summary, non-resident car loans:
- Have a maximum term set by the expiry date of the visa
- Often have higher interest rates than standard car loans
- Use the vehicle purchased as security on the loan
- May require a deposit
- May require a guarantor
Non-Resident Car Loans FAQ
Where can I get a car loan as a temporary resident?
You can apply for a non-resident car loan with banks, brokers, and non-bank lenders. Applying online with non-bank lenders will often be the fastest way of gaining approval, while banks generally offer lower interest rates.
Do I need to provide a deposit?
You may not be required to provide a deposit on a non-resident car loan, however temporary residents will find it easier to gain approval if they can provide a deposit. Doing so will also reduce the cost of your regular repayments, which may also reduce the total interest you will pay.
Do I need to provide security?
It is unlikely that you will find a lender who offers an unsecured car loan for temporary residents. In most cases, the vehicle you purchase using the funds will act as security on the loan. For this reason, most non-resident car loans have a maximum loan amount equal to the purchase price of the vehicle.
Which visas are eligible?
Car loans for temporary residents are available on a range of visas. Below is a full list of visas accepted by lenders in Australia when considering finance.