Can I get a personal loan if I've just changed jobs?

The job market in Australia is competitive at the moment. At the time of writing, the unemployment rate sits at a meagre 3.5%. However, wage growth - currently at 3.3% annually - is still well below inflation, leading many Australians to look elsewhere for higher pay.

According to NAB’s Changing Workplace report, one in three workers had changed jobs over two years, and nearly a quarter of Aussies (24%) were considering changing in the first few months of 2023 alone.

There are plenty of reasons to want to leave a job. Common factors include stability, flexible hours, and more purposeful work. However, while moving to a new job can often be vital to your career and well-being, it can come with one side-effect you weren’t aware of: you could be temporarily ineligible to qualify for a loan. 

This article will explore the requirements for getting a personal loan after a job change. If you’re considering applying for a loan but are also changing jobs, you’ll hopefully better understand how job stability and income can impact your loan eligibility.

On this page:

• Main factors determining loan eligibility
• How a job change affects loan eligibility
• What minimum income do I need?
• What if I’m self-employed? Can I get a loan?
• What other forms of income are acceptable?
• Tips to get a loan after a job change

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What are the main factors determining loan eligibility?

When applying for a loan in Australia, lenders consider various factors to determine if you’re eligible. Each lender will have its own criteria, so it’s best to find out what these are before applying. 

The main factors each lender will usually consider are listed below.

Jump to each section: 

• Credit score & history
• Income verification & debt-to-income ratio
• Personal details
• Recent spending and saving habits
• Employment history and job stability

See also: How Fintech Lenders Assess Personal Loan Applications.

Credit score and credit history

A credit score is a numerical representation of the information in your credit report. Typically ranging from 0 - 1,200 (different agencies have different scores), a higher credit score indicates that someone is more likely to repay a loan.

When assessing your application, lenders will look at your credit score and recent credit history. This means they’ll also look at your current and former credit accounts (such as credit cards, loans, and utility bills), whether you’ve been making your repayments on time and if you’ve made multiple repayments at other lenders.

Most lenders will have a minimum credit score that acts as a ‘knockout’ for applicants. If your credit score is below this number, you are unlikely to get approved for a loan.

At Jacaranda, we generally require a minimum Equifax credit score of 350 to continue our assessment if you apply for one of our loans.

Income verification and debt-to-income ratio

Lenders require borrowers to provide proof of their income, usually through payslips, bank statements, or tax returns. They will also consider factors such as the borrower's employment type, salary or wages, and any additional sources of income.

This is done so they can verify that you can make the repayments as set out in your loan contract. There’s no point giving someone a loan with repayments in the several hundreds of dollars each month if there’s no way that person can repay that.

Lenders may also assess a borrower's debt-to-income ratio, essentially the percentage of their income that goes towards debt repayments. That could include:

• Car loans and other personal loans
• Credit card debts
• Buy now, pay later (BNPL) and more.

Other ‘high-risk’ debts like wage advances and short-term loans (payday loans) will also be considered when assessing your application. A low debt-to-income ratio generally indicates that the borrower has the capacity to repay the loan, which will boost their chances of loan approval.

Your age, residency status and other details

Each lender will generally have some basic requirements you need to meet as a person. These don’t usually have anything to do with your finances but are more to do with things like your age, residency status, whether you can provide enough identification, etc.

At Jacaranda, the basic eligibility criteria you must meet before submitting an application are as follows:

• You must be at least 19 years of age;
• You must be employed on a permanent or casual basis (more on this later);
• You must be an Australian citizen or permanent resident with a fixed address;
• You must have had a consistent income going into your own bank account for the last 90 days;
• You must have an active email address, phone number, and online banking account in your name that belongs to you.

Your recent spending and saving habits

Lenders will also consider a borrower's overall financial situation, including their assets (things like shares, property etc.), liabilities (other debts), and expenses. We’ll mostly cover that last part here: a responsible lender will usually go through the last few months of your expenses to see what you spend and how much you save.

Spending too much money compared to your income or on certain high-risk categories can hurt your chances of approval. But on the other hand, building up a savings buffer through regular savings habits can boost your application.

Your employment history and job stability

Finally, lenders often prefer borrowers with a stable employment history, as it indicates a steady source of income and the ability to make regular loan repayments. We’ll go into this in more detail below.

How a job change affects loan eligibility

Serviceability - a term to describe whether you can meet all your loan repayments - is everything when approving or rejecting a loan application. A lender doesn’t know the future, no matter how advanced their technology is: anything could happen anytime.

Even if you’re earning above the median income and have been in a stable job for years, you could lose your job at any point. And the simple fact is that someone who has a habit of moving from job to job has a less consistent source of income. From a purely objective, outside standpoint, such a person would be seen as less likely to be able to afford their loan repayments comfortably.

Typically, lenders prefer borrowers employed in the same job or industry for at least three to six months or even as long as one year. However, some lenders may accept borrowers who have recently changed jobs if they can demonstrate a stable employment history.

How Jacaranda assesses recent job changes

At Jacaranda, we have the following criteria for applicants when it comes to their job stability:

• You must be employed in the same job for a minimum of one month
• You must have received at least two full payslips
• There must not be a gap between jobs larger than two weeks
• You must have changed jobs to pursue a better opportunity (aka you can’t have been sacked or made redundant)

What minimum income do you need to apply for a loan?

You may also need to earn a minimum yearly amount to qualify for a loan. The minimum income required to apply will vary depending on the lender and the loan amount you’re after. Some lenders may not have a minimum income requirement: according to Finder.com.au, major lenders in Australia require the following.

Lender	Minimum income required
ANZ	$15,000 p.a.
CBA	N/A
NAB	N/A
Westpac	N/A
Citi	$40,000 p.a.
Bankwest	$20,000 p.a.

It’s common for lenders who do have a minimum income threshold to require around $20,000 per year. The more you borrow, the more you may need to earn to be eligible.

What types of income are accepted?

It’s not just the number going into your bank account that can matter. Lenders also care about where that money comes from. 

For example, most lenders may require the majority of your income to be paid by an employer. This means you may have to receive at least 50% of your total income from:

• A full-time or part-time job,
• A casual job,
• A job as a sole trader or contractor.

This might not always be the case, though. For example, some applicants might be retired and no longer working but still want to take out a loan rather than pay in one lump sum. Other sources of income that may be accepted (depending on the lender) include superannuation income.

However, most other sources of income - known as ‘secondary income’ generally can’t be more than 50% of your take-home pay. At Jacaranda, these secondary income sources include the following:

• Dividend income
• Centrelink income & government benefits
• Gig economy income (Uber, Doordash etc.)
• Pension income
• Rental property income

Income sources that are commonly not accepted are:

• Lump sum superannuation payments
• NDIS payments
• Cash deposits or gifts
• Emergency payments (such as disaster payments) and more.

Each lender will have its own restrictions on what it will and won’t accept, so try to find out what these are before applying.

Can you get a loan if you’re self-employed?

According to the Australian Bureau of Statistics (ABS), approximately 2.4 million Australians were self-employed as of 2021. That’s more than 18% of the total workforce! That number has been steadily increasing for a while. In 2011, 2.1 million Aussies worked for themselves.

With the number of self-employed Australians growing constantly, it’s important that they, too, can access finance when needed. However, it’s traditionally been harder for self-employed people to obtain loans because they don’t meet the usual income verification requirements. For example, they often can’t provide regular payslips because they might not actually receive a payslip from themselves!

When assessing the loan application of a self-employed borrower, lenders may require additional documentation such as tax returns, profit and loss statements, and bank statements to verify income. You may also need to provide:

• Proof of rental income or other investment income
• A Notice of Assessment from the Australian Taxation Office (ATO)
• Company-specific information (such as your ABN, address etc.)

Some specific lenders offer low-doc (short for ‘low documentation’) loans to self-employed individuals, but these can sometimes come with higher rates and fees.

At Jacaranda Finance, we do provide loans to the self-employed. However, your self-employed income must not account for more than 50% of your total income.

Tips to get a loan after a job change

If you’ve recently changed jobs but want to take out a loan for a major expense, don’t panic! You still can, although it will depend on whether you do a few things:

Get a letter from your employer

If your new job pays a higher salary or comes with other financial benefits, such as bonuses or commissions, provide documents to showcase your new, improved financial stability when you apply.

Attaching a letter from your new employer vouching for you as a person can also help.

Attach security to your loan

Some lenders may be willing to grant you a loan after starting a new job if you apply for a secured loan. With a secured loan, you will attach something of value to your loan contract (commonly a car), which the lender can repossess if you default.

This can give the lender more confidence in your loan application, as they won’t be left in the lurch should the worst happen.

See also: Secured vs Unsecured Loans.

Check & improve your credit score

A strong credit score and history can improve your chances of loan approval and result in more favourable loan terms. See our article on nine ways to improve your credit score for some handy tips.

Compare your options

As we’ve made pretty clear throughout this guide, every lender will have its own specific eligibility criteria. These should be available in some form on their websites, but if not, compare a few lenders that look like they might suit you and ask if you can qualify based on your employment situation.

If in doubt, reach out and ask!

If you’re unsure whether you’re eligible for a loan, whether you’ve just changed jobs or have lost a source of income, it never hurts to ask the lender themselves. 

Finding out if you meet the eligibility criteria before you apply can save you time. But by explaining your situation to them, you could potentially qualify anyway in some circumstances. Alternatively, the lender could let you know when you’ll be eligible to apply again.

Our friendly, Australian-based customer service team at Jacaranda will be happy to assist you with any questions you might have. Get in touch with them today.

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The information on this website is for general information only. It should not be taken as constituting professional advice from the website owner - Jacaranda Finance. Jacaranda Finance is not a financial adviser, and the content on this page does not take into account your objectives, financial situation or needs. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances.

Jacaranda Finance is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly by use of this website.

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