Written by Most of us encounter financial struggles from time to time, so it’s not unusual to end up with a default on your file if you can’t quite keep up with repayments. Fortunately, there may still be options available to you if you need some extra money.
How can I get a personal loan with unpaid defaults?
There are plenty of lenders in Australia that work with borrowers who’ve struggled with their credit, including those with unpaid defaults on their file, including some that Savvy is partnered with. Bad credit personal loans are designed to give people in this position access to the funds they need, with lenders more focused on your ability to cover the loan than your credit score.
If you have unpaid defaults and other credit struggles on your record, you’ll be required to pay a higher interest rate and fees than you would with a good credit score. That’s because lenders treat borrowers in this position as being at a greater risk of defaulting again. However, these loans can open doors where others can’t when you need funds for any number of reasons.
What types of unpaid default can I have on my file?
Not all defaults are made equal when it comes to personal loans and how applications are assessed. First of all, it’s important to understand that there are two main types of default: finance and non-finance defaults.
Finance defaults are those on credit products, such as other loans, credit cards and buy now, pay later (BNPL) facilities. There are more restrictions on these defaults, such as not accepting any in the six months prior to the application and no more than two unpaid in the previous two years.
Non-finance defaults aren’t held in the same regard, though. Lenders may have different requirements when it comes to the type and number of unpaid defaults, but some of the types that may be accepted include utility or phone bills and equipment hire.
Some lenders may accept up to an unlimited number of these defaults, even if they’re unpaid. However, that may not be the case for others. When you apply with Savvy, a member of our team will walk you through your available options if you have unpaid finance and/or non-finance defaults on your file.
How much can I borrow?
Loan amounts for borrowers with unpaid defaults will vary depending on a wide range of variables. The most important of these is how your lender grades your profile; for instance, you may be able to access up to $15,000 if you only have one unpaid default, but only up to $10,000 if you have more than two.
Aside from your lender, though, some of the variables that can impact your borrowing power include:
- Income and expenses: the more money you have available after expenses are deducted, the more you’re likely to be approved for.
- Whether you have an improved recent record: showing that your defaults are a thing of the past will also help boost your lender’s confidence in you.
- Type of default: you may be able to borrow more if your only defaults are non-financial, as showing a strong loan repayment history could help you out.
- Employment stability: if you’ve been able to hold down a stable job for a long time and are earning a consistent income, your chances of approval for a larger sum will be greater.
- Security: if you supply a valuable asset, such as your car, you may be able to increase your borrowing power up to as much as $30,000 in some cases.
How quickly can my loan be approved and funded?
Personal loans can be approved and funded as soon as the same day in some cases when you apply online with Savvy. However, the true time it takes will come down to a range of variables, including:
- The time you apply: if you apply late at night or on the weekend, your lender may not be open and therefore will be unable to process your application until the next business day.
- The complexity of your file: more complicated financial histories may take more time as your lender obtains more information about you before making a call.
- Your lender’s process and caseload: each lender is different when it comes to how long they might take to assess and approve applications.
- Your bank’s processing time: it may not be an issue with your lender at all, as your bank may take longer to process a large payment, especially outside standard business hours (after 6:00pm or on weekends).
- Whether you provide all the right information: a simple (and avoidable) holdup on loan applications is incorrect or incomplete information. When you apply with Savvy, we’ll tell you exactly what you need to apply.
How to get approved for your personal loan with unpaid defaults
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Take steps towards improving your credit rating
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Utilise your savings where possible
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Avoid any job changes where possible
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Apply with a co-borrower
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Enlist a guarantor
Personal loan repayment calculator
It’s important to have an idea of what different loans might cost you overall before you apply. Fortunately, Savvy’s personal loan repayment calculator is simple to use and tells you everything you need to know about how much different offers might add up to overall based on a variety of different factors.
Apply for your personal loan online
Personal loan eligibility and documentation
Common questions about personal loans with unpaid defaults
No – each lender must follow Australian responsible lending guidelines, meaning they have to assess each application on its merits and cannot guarantee approval for any type of borrower. They can’t lend to a borrower who they don’t believe is capable of repaying the loan they’re asking for, for instance, so every loan application is subject to lender review.
No – if you’re currently bankrupt, you’re not eligible to be approved for a personal loan. Once you’ve been discharged, however, your application may be considered by certain specialist lenders who accept borrowers with past bankruptcies on their file. You can apply with Savvy and speak to a member of our team to learn about your options.
A small cash loan is another option for borrowers with unpaid defaults. These loans are available from a few hundred dollars up to $5,000, with terms from 16 days to two years. They’re generally easier to obtain than standard or bad credit personal loans. Your funds can be sent to you as soon as 60 minutes after you apply in some cases. However, compared to personal loans, the fees on cash loans are much higher and you often won’t have as long to repay them.
Yes – we’re partnered with lenders who allow you to pay out your personal loan early without incurring any fees for doing so. This can save you a meaningful amount in interest and fees on your finance deal overall, so you should look to take advantage of this where possible.
Bad credit personal loan terms are generally more limited than standard available terms, with unsecured loans ranging from as short as one year up to a maximum of five. However, the amount you’re borrowing will impact your potential loan term. For example, if you’re only taking out a $6,000 loan, you may be limited to terms up to two to three years, rather than five.
Yes – by taking on a personal loan and making full and prompt repayments, positive marks will be recorded on your credit file. If you can do so consistently across your loan, your score will continue to rise, which can potentially help you get approved for a better loan in the future. As a borrower with unpaid defaults, your priority should be to avoid the same thing occurring on your new loan.
