Low Income Personal Loans

Don’t ask for too much

If you need your funds quickly, it’s important that you understand your borrowing capacity before applying for your personal loan. Asking for more than you can feasibly afford will prevent you from moving further with the application until your amount is lowered to one that your income can handle.

Fortunately, however, because of the speed of personal loan application processing by your Savvy-partnered lender, you’ll know within a minute whether it was successful and can try again. Be careful, though: too many rejected applications in quick succession will show up on your credit file and potentially make it more difficult to secure financing.

Build your savings where you can

Lenders view savings as an indication of financial responsibility, which is imperative when it comes to taking on the responsibility of repaying a loan worth thousands of dollars.

Putting aside extra funds each week or month is similar to making regular loan repayments in terms of practicing discipline. Displaying development in your savings account will help show your lender that you can manage your finances and can increase your chances of approval.

Build or maintain your credit score

Your credit rating is perhaps an even greater indicator of how you’re likely to manage the commitment of repaying your personal loan. Personal loan financiers essentially view them through the lens of risk: the lesser the risk of them losing money on the loan, the greater the chances of approval.

It’s important to note that just because you don’t earn as much as other borrowers doesn’t mean you have a bad score. If you’ve successfully repaid similar loans in the past, have low credit limits and no unnecessary cards and pay your bills on time, you could well have a good score. Customers with good credit scores can even be automatically approved if their proposed loan commitments are suitable with their income with a lower interest rate.

The other major benefit of a good credit score is that you open yourself up to lower interest rates than is available to borrowers with lesser ratings, saving you further money. You can check your report for free every three months using a credit reporting agency such as Equifax.

Apply with a co-borrower

Most low earners don’t have the disposable income required to service a larger personal loan on their own. However, you can expand your borrowing capacity significantly by applying with your partner.

Your combined incomes are counted as one, which makes you more eligible to take out loans for greater sums of money. Combined income can also speed up the processing of your personal loan, as your lender is likely to scrutinise it less than if it were solely your income.

Prepare your documents in advance

It seems simple but having all of the right documentation ready to submit from the outset of your personal loan application is a simple way to help it run without too many hiccups. You won’t be required to submit a large number of documents for this, either:

• ID such as your driver’s licence or passport
• Your two most recent payslips and employment contract (possibly 90 days’ worth of bank statements)
• Centrelink statements if applicable
• Information on assets (such as your house, car or other valuables you own)
• Information on liabilities (such as outstanding debts)