Short term finance in Aus

[magman]

Hi all,

Just wanted to see if anyone knows of any financial institutions that will provide finance to immigrants, especially short term loans etc, especially people with no credit record yet, as I want to build it up till we got PR, then it should also be easier getting a home loan.

I was keen to buy some electronics on a store loan, but they wouldn't give us finance, untill we were on PR. Is it only your own bank that will give you a short term loan when they can see your salary coming in?

[RYLC]

This may sound a bit left field but would buying something from Target, Big W or KMart on lay-by help (small regular payments and all that). I know lay-by isn't something we are used to but plenty of my Aussie friends use it for Christmas because it is interest free (just a one off admin free up front) and spreads the payments.

[AndreR]

I got a loan from NAB. I went through the migration banker that was assigned to me when I first set up the account and the only requirement was that I needed to show a permanent address and my first months pay slip. The interest rate is very high though, but I needed the money to buy a small car.

[HansaPlease]

Hi Magman,

How long are you planning to take to get PR?

If it's a couple of years, then I wouldn't stress too much - that's more than enough time for a bank to consider you eligible for a home loan. I find that some of the bigger banks are using far more logical means to asses your eligibility than they used to. Commonwealth in particular. They don't only look at your credit rating (a bad one is a lot worse than no history) but more importantly - can you afford the repayments - are you employed in a stable job, or do you sell apples on the highway, that sort of stuff.

We were concerned with our recent house purchase on whether we would get finance because my wife was on a part time short term contract - they looked at it logically in that she is an accountant with years of experience (looked at her work history) - it's not like she's unemployable.

Anyway, food for thought... You don't sell apples on the highway do you

[Bronwyn&Co]

Magman those kind of store deals are usually run through a third party finance company and they are inflexible. The guy in the store just fills in boxes & the computer says yes or no. When we first arrived we heard the Harvey Norman deal where you could pay back a heap of stuff with 'no interest, no deposit'. I told my husband, we must do it, they are crazy. So we chose stuff & sat there for about 2 hours doing forms and it came back declined, lol. Even after the guy sent us to the car to get our passports. You needed PR. So we had to pay cash.

But a few months later I got a home loan ? go figure.

The car we did through GE Money. You could look at them.

But I wouldn't stress too much, if you have a job you could probably get a credit card if you really wanted to. Not that I approve (never had one) but Citibank always has adverts running.

As others have said, it's probably wisest & cheapest to ask your normal bank for a loan or a reducing overdraft facility after you have been in a job a few months. Imho.

Edited April 30, 2014 by Bronwyn&Co

[Bob]

Your prioritites may need to change while on a temporary visa.

For instance, you just drive a cheap car instead of buying a flash, new car. You rent until you can afford to buy a house. You save until you can buy the TV instead of paying by credit.

Once you have PR, then you can establish your credit more successfully and buy like any other Aussie, but until then, your criteria are quite different and you may need to operate within that framework.

Sure . . . it may be a little inconvenient in the meantime, but people lived that way 40 years ago, before credit became widespread. It is possible to get by still.

Edited May 1, 2014 by Bob

[Gerhardk]

The electronics store loans are a finance company that provides finance and they evaluate you just like any institution would do - it is not the store that provides this. Basically it is serviceability of the loan that is important so you need income history.

It seems that building a credit record is highly overrated and not used (unless negative). In addition to serviceability of loan, when it comes to home finance, the bank will consider the loan to value ratio to make sure they are not exposed i.e. on $600k home they will provide 80% finance so $480k finance as long as you can service this finance and they make sure the home is worth $600k.

With serviceability I mean you have enough income (or potential income) to honour the periodical payments.

For Bronwyn & Co, I think the no deposit - no interest deal is really a discount that you are losing out on so you are paying say $1000 for something you could buy on cash for $800. The criteria whether you will get this type of finance is the same = serviceability.

You can apply to your bank for overdraft facility and / or credit card with overdraft facility but I am sure they want to see income going in first.

[AndreR]

I went with a loan as opposed to a credit card because we want to see if we can actually live without one. A Credit Card gives you a safety net, but its a double edged sword because unless you're super disciplined its all too easy to drop into the red on a monthly basis. Being credit card free is harder than you'd think. A couple of times this year we've had to limit ourselves to $40 a day towards the end of the month because that's all the money we had left. Its really nerve wracking and stressful but it forces you to learn how to budget and think about every cent you spend.