How to get a personal loan application approved
Do you know what banks and other lenders look for in a personal loan application?
Personal loans are often the first loan that a persona will apply for, probably years before they ever think about applying for a home loan.
Personal loans are great for:
1) Buying a car. Many personal loans are called car loans or vehicle finance and are secured by the car. That means the car can be repossessed if the loan is not repaid on time.
2) Buying furniture, appliances, computers and other expensive household items. A personal loan is good for making large purchases and is generally a cheaper way to finance a big purchase than using a credit card.
4) Debt consolidation. Often personal loans are used for paying off other debts. Personal loans have a set repayment plan and generally lower interest rates than credit cards and other consumer finance options like store cards. A debt consolidation loan can be a good way of getting on top of debts.
Getting approved for a personal loan
Today, a personal loan can be applied for online. Many banks and credit unions will give you an initial conditional approval within 60 seconds of lodging an online personal loan application.
Beware of these personal loan lenders
Some online and ‘payday’ lenders advertise ‘easy’ small loans of often just a few hundred dollars. Sometimes these lenders work as part of or in conjunction with pawn brokers. Others operate online and advertise heavily on social media with catchy jingles and humorous short videos.
These loans feature high interest rates, fees and charges that can legally total up to 48 per cent per year. Some lenders will encourage you roll over your loan or apply for a new loan when you repay the first ‘small’ loan.
The Australian Securities and Investment Commission has recently prosecuted several payday and online lenders and has warned consumers about payday lending traps that can leave borrowers in a cycle of expensive debt.
Infochoice lists hundreds of cheap personal loans from reputable Australian lenders, like the big four banks, the smaller banks and more than one hundred highly regulated Australian credit unions.
How to get approved for a personal loan
To get approved for a personal loan from a reputable lender you need to:
1. Be over 18, live in Australia and be entitled to live and work in Australia.
2. Check out how much you can afford to borrow and repay using the Infochoice Personal Loan Calculator. This will give you a good idea about ho much to borrow.
3. Have an income from employment or investments. Income from Centrelink may be added to your income, but generally pensions or benefits are considered by lenders to be necessary for funding your living expenses. You will need to meet minimum income requirements to get approved for a loan.
4. Have a good credit rating. If you don’t know what you credit rating is telling lenders about you and your history of repaying your debts and bills, you can request a free credit report from Veda Advantage or Dun & Bradstreet. People who have been bankrupt or have undertaken a Part IX Debt Agreement may not be eligible for a personal loan.
5. Have a good bank account history
Being able to demonstrate that you manage your finances effectively can help you show you’re ready for the responsibility of repaying a personal loan. If you can show, with your account statements, that your salary or wages are being paid into your account and you’re using that money to pay your bills and saving a bit, that is a good sign for a lender that you can manage a loan. If you can show a history of putting some savings aside, that will be even better.
6. Compare deals and find the right personal loan for you
Compare unsecured personal loans at Infochoice. These might be good for paying for a holiday, wedding or paying off debt. Looking to buy a car or other vehicle? Compare car loans here. If you have security to offer a lender, compare secured personal loans here for a better rate. If you are looking to consolidate debts and repay them with a personal loan, compare debt consolidation loans here.