Personal Loan Pre-Approval
Compare from a range of personal loan offers with Savvy and get pre-approved to find the best personal loan for your needs.
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What is personal loan pre-approval and how does it work?
Personal loan pre-approval takes place before your lender submits a hard enquiry and is done to determine whether you qualify for a specific type of personal loan that they provide. The pre-approval process differs from lender to lender but involves less documentation than hard applications and is based on meeting basic eligibility criteria as set by lenders.
Personal loan pre-approvals help give customers an indication of their chances of formal approval based on their eligibility. Furthermore, pre-approval gives customers an idea of their expected repayments and what interest rate they will qualify for.
What are the basic eligibility criteria for personal loan pre-approval in Australia?
The following are the basic requirements to be met for personal loan pre-approval:
- At least 18 years old
- Australian citizen, Australian permanent residency or living here on an eligible visa
- Meet minimum income requirements (usually at least $20,000 annually)
- Currently employed or receiving regular income through full-time, part-time or casual work
- Have a good credit rating and no prior history of bankruptcy
What are the benefits of a personal loan pre-approval?
A major benefit of personal loan pre-approvals is that they give you a solid idea of what you're capable of borrowing ahead of time. If you're using your personal loan to buy a particular item, such as a car or jewellery, this gives you a clear ceiling as to how much you can potentially spend, which results in a stronger hand when negotiating on its price.
In addition, quick processing is another advantage of the personal loan pre-approval process. Once the initial credit and finance checks are complete, your lender can move on to other remaining steps, expediting the processing time of your personal loan application.
If you’re concerned about a pre-approval negatively affecting your credit score, don’t be. A personal loan pre-approval is a form of soft enquiry and will not impact your score.
How to get pre-approved for your personal loan
Calculate how much you can afford to borrow
Firstly, it’s important that you don’t apply for too much and stick to a figure that you can feasibly repay. This will give you the best chance of pre-approval at the first attempt and enable you to start considering how you can use your funds. One way that you can more accurately calculate the cost of your loan to determine the monthly and overall cost of your loan is by using our personal loan repayment calculator. However, your lender will typically return to you with an amount they’d be willing to approve if your initial application asks for too much.
Compare personal loans with Savvy
You should also compare as many offers as possible when surveying the personal loan landscape for potential deals. By doing this, you give yourself the greatest chance of finding the best, most affordable loan for your situation, as there are plenty of lenders and products on the market jostling for your business.
You should aim to get pre-approved with the lender you’re looking to take out your loan with, so it’s important to thoroughly compare interest rates, fees, maximum and minimum loan amounts and terms as part of this process.
Gather all of your documents
Because some pre-approvals consider your application in much the same way as a standard approval, you may need to submit the required documentation as part of this process also. While lenders may differ when it comes to the specifics of the documentation that they need, you can expect to submit some of the following:
- Photo ID (passport and/or driver’s licence)
- Your last two payslips
- Employment contract and 90 days of bank statements may be required
- Centrelink income statements (if applicable)
- Your online banking account information
- Information on current assets and liabilities
Submit your preliminary loan application
Once all of this has been gathered and completed, you’re ready to submit your preliminary loan application to your lender.
From there, your lender will assess your application based on your affordability, which is formed in large part by your credit score, employment situation and income.
Receive your quote
You should receive your quote within one day outlining the amount your lender would be willing to approve based on your application, although this process may be automated so that you could receive it instantly. From there, you could take this pre-approval with you to help negotiate on the price of an item you’re looking to buy from a private sale to give you a strong hand with which to bargain.
Pre-approvals generally last for three months, so you can utilise it where you see fit up to that point if you’re not yet ready to take the plunge on a loan.
