A personal loan can give you access to the funds you need quickly and easily, but how exactly does the process work? Learn all the ins and outs of applying and getting approved for the loan you're after with us today!
What do I do before I get my personal loan?
There are several key steps that go into the personal loan process before you even start your application. It’s important that you understand these closely to increase the quality of product that you end up signing onto. The things that you should always do prior to commencing your application are as follows:
Calculate your borrowing power
It’s of great importance that you work out how much you can afford to take on with a personal loan before you submit your application. Lenders won’t approve applications that they don’t have full faith in that the prospective borrower will be able to repay the amount they’re asking to be lent.
While there are factors such as your credit score and the nature of your income that’ll influence your borrowing power and can’t really be ascertained by you alone, you can calculate the amount you’d be able to comfortably afford using your monthly disposable income (income minus expenses). Lender will usually stick to loan repayments up to around 30% of this income. You can also use our borrowing power calculator to crunch further numbers.
Decide on the type of loan you want
When you’re looking at different personal loans, you’ll need to consider the type of financing you want to take out in terms of loan security. Unsecured loans are the most common type of personal financing, which don’t require the use of an asset as collateral for the loan. These loans are more accessible for a wider range of people, as not everyone has a suitable asset to be used, and are faster to process as a result of the lack of collateral.
Secured loans do use assets like your car, boat, motorcycle or caravan as collateral for your loan. Adding an extra safety blanket will increase your lender’s confidence in the agreement, which results in a greater borrowing power and reduced interest rate compared to unsecured loans. Consider which of these options best suits you before you apply.
Compare different offers with Savvy
Perhaps the most important part of the pre-application process is to conduct a thorough comparison of personal loans in Australia with Savvy. We make the process of comparing offers simple by breaking each personal loan deal offered by our partners and laying out all the most important information for you to find in one place.
You should be aware of the best ways to compare between different personal loans in Australia, with the key aspects to look out for including:
- Interest rates: look for the lowest rates where possible to save money over your loan
- Fees: similarly, it’s important to try to minimise the cost of fees charged, such as the following:
- Establishment fee: $0 to $595
- Ongoing fees: $0 to $10 per month
- Late payment fees: $15 to $35
- Repayment flexibility: prioritise loans which enable you to make free additional repayments and pay out your loan early without charge
- Loan terms: ensure that your lender offers the length of loan that you’re most comfortable repaying, with terms from one to seven years
Apply for your personal loan online
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Complete our simple online application form
First and foremost, you’ll need to fill out our quick and easy online form. Tell us about yourself, your finances, the loan you’re after and why you need it in just a few minutes.
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Compare your options with Savvy
Once you’ve done this, you’ll be able to assess the products on offer from our partnered lenders. A member of our team will reach out to help you choose the best available offer.
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Send your documents and formally apply
If you’re happy with one of the options available, you can go ahead and formally apply. We’ll handle this for you; simply send the required documents through our online portal and we’ll do the rest.
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Get approved and sign your contract
We’ll let you know when you’re formally approved, which can happen in a matter of hours, and all you’ll need to do is sign your loan contract electronically to receive your funds as soon as the same day.
Personal loan eligibility and documentation
Eligibility
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Age
You must be at least 18 years of age
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Residency
You must be an Australian citizen or permanent resident (or, in some cases, an eligible visa holder)
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Income
You must be earning a stable income that meets your lender’s minimum threshold (this can start from as little as $20,000 per year)
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Employment
You must be employed on a permanent, casual or self-employed basis
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Credit score
You must meet your lender’s minimum requirements related to your credit score and not be bankrupt or under a Part IX debt agreement
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Contact
You must have an active phone number, email address and online bank account in your name
Documents
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Personal information
Your full name, date of birth, address and contact details
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Photo ID
Such as a driver's licence or passport
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Payslips
Your last two consecutive payslips (or your last tax return if you're self-employed)
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Assets and liabilities
Information about any assets you own (such as a car or house) and liabilities in your name (such as other loans)
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Bank statements
90 days of bank statements may be requested, but not always
Personal Loan Top tips
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Improve your credit score
The higher your credit score, the more trustworthy you’ll be seen to be by your lender. Displaying a positive history of repaying similar loans will give them more confidence in your ability to service the loan you’re applying for. An increased score can not only lead to expanded borrowing power but also lower interest rates and fees.
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Stick to a budget to reduce expenses
Laying out a clear budget before you apply can help you see where your money is going. By taking the time to consider this and determine where you can perhaps cut back on expenses or lower credit card limits, you’ll be able to free up more money each month to dedicate to the repayment of your personal loan, which then increases your borrowing power.
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Apply with your partner
Adding your partner or another family member as a co-borrower to your application will also boost your chances of approval. This is because it’s seen as a safer proposition to have two borrowers on an application compared to one, as there’s an in-built backup if one of the applicants loses their job which isn’t present on single applications.
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Try to avoid job changes and moving houses
Lenders always look for borrowers who can display a clear level of stability in their lives. Having long-term, permanent employment suggests that your income stream will be stable and less likely to run dry compared to recent casual or self-employed workers. Similarly, staying in the one location will reduce the risk of fluctuating rent or mortgage costs.
