Personal Loan Pre-Approval
Understanding how a personal loan pre-approval can be of benefit to you is important. With the risk of taking out a personal loan, pre-approval can work in your favour and help you understand your financial eligibility while determining what sort of loan you qualify for. Here we explain what a personal loan pre-approval means, the pre-approval application process and how pre-approval can be of benefit to you.
What is personal loan pre-approval and how does it work?
Personal loan pre-approval occurs prior to your lender submitting 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 an eligible visa.
- Live in Australia.
- Meet minimum income requirements.
- Currently employed or receiving regular income through full-time, part-time or casual work.
- Have a good credit rating.
- Not be going through bankruptcy.
What are the benefits of a personal loan pre-approval?
A major benefit of personal loan pre-approvals can be a lower interest rate depending on your credit situation. If you hold a strong credit score, your interest rate as a result of pre-approval is likely to be lower than what it would have been had you applied for a personal loan otherwise. Also, if you’re concerned about a pre-approval negatively impacting your credit score, don’t be. A personal loan pre-approval is a form of soft enquiry and will not impact your score.
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
What do I need for a personal loan pre-approval?
The personal loan pre-approval process varies from lender to lender; therefore, the requirements will differ but often include the following:
- Completed & signed application form
- Identification documents
- Proof of employment and income (e.g. tax returns, payslips)
- Proof of expenses
- Proof of assets, liabilities, and debts (e.g. loans, credit cards)
What conditions must you meet to be pre-approved for a personal loan?
Lenders can but are not guaranteed to provide pre-approvals based on the following conditions being met:
- Verification of personal and financial details.
- Confirmation that financial details show you can pay back the loan.
- Lender has been provided all your relevant information required to verify deposits, securities, assets, income, and liabilities.
What is the process for a personal loan pre-approval?
You will need to complete a preliminary loan application and provide your lender with the relevant documents regarding your financial situation.
Your chosen lender will proceed to review your documents as provided in the preliminary assessment.
Your lender will provide you with a quote. The quote highlights the amount of money they are prepared to lend as well as the determined interest rate you are likely to be charged on the personal loan.
Top tips for successful personal loan pre-approval
When going down the route of a personal loan pre-approval, follow these tips to ensure you get the best offer from your lender.
- Ensure you meet all basic eligibility criteria.
- Apply for the correct amount and no more or less than what you need. Remember, personal loans are meant to assist you in the short term and not leave you with long-term debt.
- Demonstrate a strong account history and show an ability to effectively manage your finances (especially savings).
- Consistently maintain a good credit rating by paying bills on time.