Apply For A Personal Loan
Who Can Apply for Personal Loans
If you are an Australian resident and over 18 years of age then you will be able to apply for a personal loan from any of the banks, credit unions and building societies in Australia. Obviously just because you can apply for a personal loan does not necessarily mean that you will be successful in you application. You will have a much better chance of being successful if you have steady employment and a good credit rating.
With some lenders you are able to apply for a personal loan online, provided that you have all of your financial information handy. Some people even prefer to use a finance broker and get them to apply for a personal loan on their behalf. This can be done by simply giving them all of your personal and financial details and then authorizing them to proceed with the application.
Important Personal Loan Information
The thing about personal loans is that they will vary from lender to lender, so it is important that you do thorough research before you enter into one. Even after choosing the lender that is right you will find that your personal loan application has a better chance of success if you understand the following important points.
- Before submitting your personal loan application you should always get a copy of your credit rating report and check over it to see if there are any bad marks on it. Then, if they were an error, try to get them corrected. If not then at least be ready with a detailed explaination why these bad marks appear on your credit rating, because the lender is going to see them and want to know why they are there.
- It should come as not real surprise that lenders prefer borrowers that are in stable employment. Therefore it goes without saying that you'll stand a much better chance of having a successful application if you can demonstrate that you have been in uninterrupted employment for a long period of time.
- First time borrowers may want to consider using a guarantor, as this will increase their chances of getting the loan. It is best to use a good friend or relative who has a good credit history for this. They must, however, have faith in you because they will be agreeing to pay the lender if you are unable to meet the repayments on your personal loan.
- Be careful about just looking at the interest rate quoted by the lender, because lots of banks and financiers will offer a low rate but fail to mention all of the ongoing fees and charges.
- Be honest with all of the financial information that you provide. There is a good chance that you will be asked to produce documentary evidence to prove any information that does not look right. Also by providing incorrect financial figures you are really only harming yourself, because the checks are there to stop you fron getting into financial difficulties later on down the road.
- When processing secured personal loans lenders will use an asset that you own as security for the loan. However, a number of lenders may try to use an asset that is worth considerably more than the amount that you are borrowing. This way they will feel more comfortable, but it leaves you in a much less secure position financially. For example if you use your family home as security for a loan of $10,000 then the place where you live might be in trouble if you default on your loan. So always try to provide an asset that roughly matches the amount that you are borrowing as security for the loan.
Questions About Personal Loan Applications
Asking questions of each lender is one of the best ways to understand how the whole process works and help you to decide which one is right for you. So before you submit your personal loan application ensure that you get comprehensive answers to all of the following questions.
- What is the AAPR interest rate (which is the rate that include all if the other fees and charges)?
- Is it possible to qualify for a lower interest rate on the personal loan?
- Is there an option to choose the term of the loan (ie: how many years)?
- Can you make extra repayments in order to pay off the loan sooner?
- Is there a fee for making extra repayments or paying off the personal loan sooner?
- Are there any other ongoing, monthly, extra or hidden fees?
- Do I have a choice of fixed or variable interest rate for the loan?
- For variable interest rate loans how much notice is given before the rate changes?
- For fixed interest rate loans, when does the fixed period finish and what rate does the loan default back to?
- What documentation is needed in order for the personal loan to be approved?
- On what date will my first payment have to be made?
- Is there any type of minimum amount that I must borrow?
- Is it possible to get finance pre-approved before purchasing?
- How long does the pre approval last for?
- What is the maximum amount I can borrow and what happens if I borrow less than this amount later on?
- How long will I have to wait until my application is approved?
- Is the interest for the loan calculated daily on the unpaid balance only?
Documents Required for a Personal Loan
As with any type of loan there will be a substantial amount of financial and personal information that you have to provide to the lender when applying for personal loan. This information helps the lender to work out what sort of risk category you fall into, so the more comprehensive the information you provide the better your chance of success. Be aware that you may be asked to produce the following documents if and when requested to prove that the information you provided in your personal loan application is correct.
- Company or work related documents cleanly outlining how long you have worked there and how much you earn on a regular basis. This can be in the form of regular payslips or your last group certificate.
- To prove you have a good savings history you might need to show a copy of your bank statements for the last 3-6 months.
- You will need documents showing what your accommodation expenses are, such as mortgage statements or rental receipts.
- For all other living expenses and allowances that you have to pay regularly you may need to show documentary proof. This can include such things as child care, child maintenance support, rates, insurance, living expenses, etc.
- If you stated that you own assets such as a house, land, etc then you will have to prove it with the certificate of title.
- If you have any other loans or liabilities then you will need documents outlining how much is still owing on your home loan, credit cards, overdraft account, etc.
- When your personal loan application is approved, you might have to provide documents to prove your identity. This can include a driver's licence, household bill, birth certificate and debit or credit card, which are used as part of a 100 point ID check.
If you are not sure about the meaning of some of the terms or abbreviations used by lenders then you can check out the personal loan terminology page, which has a detailed explaination about some of the more confusing aspects of getting a personal loan.
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