How to Apply for a Personal Loan

Read about the ins and outs of the personal loan application process and how to maximise the quality of your deal with Savvy.

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, updated on October 5th, 2023       

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What are the steps for applying for a personal loan?

Compare your options with Savvy

Before you start filling out any forms, it’s of paramount importance that you take in as many lending options as possible in the comparison process. You can do this here with Savvy, as we break down the top offers on the market right now in all of the areas that are most important for you to consider. Some of these factors include:

  • Interest rate: even minute differences of 1% p.a. in interest rate can save you hundreds or more over the life of your loan.
  • Fees: while some lenders may charge ongoing or establishment costs, others won’t charge you for one or either of these.
  • Loan terms: you must be comfortable when repaying your personal loan, so you should always make sure your lender offers your preferred term between one and seven years.
  • Loan amounts: you should ensure you’re applying to a lender who offers the amount you need and even though this generally ranges from between $2,000 and $100,000 (depending on the type of finance you're after), minimums and maximums may vary.
  • Repayment flexibility: you should always leave the option open for you to make extra repayments towards your loan without incurring fees, which will help you save a significant amount overall.

Fill out your lender’s application form

Lender application forms are usually very simple to follow and don’t require an abundance of information. This is used to get an idea of who you are as a borrower by asking about things like your income, expenses and dependants. These forms will usually only take you around five to ten minutes to fill out.

Find the correct documentation

Alongside your form, you’ll need to submit copies of several documents to your lender. These are all required to back up what you’re saying in your application form and to inform your lender of who you are as a borrower. The main documents you’ll be required to supply are:

  • Your last two payslips
  • Your photo ID (such as a passport and/or driver’s licence)
  • Details on liabilities such as outstanding debts
  • Internet banking information
  • Proof of address (usually supplied by a recent utility bill)
  • 90 days of bank statements and your employment contract may be requested, as well as information on your assets

Submit, sign and receive your funds

Once you’ve gathered everything you need, you can submit your application to your lender. Upon receiving an instant, 60-second outcome, your lender will send through a loan contract shortly thereafter if you were successful. You can then sign this document, return it to your lender and see the approved funds hit your account within 24 hours of your initial application.

Top tips for what to do before you apply for a personal loan

Work out how much you can afford to borrow

You should always determine what sort of personal loan you can afford to take on before you commence the application process, as this saves you from potential back and forth with your lender on an amount they’d be willing to approve (or rejections altogether). You can use our personal loan borrowing power calculator to crunch the numbers on what you’re likely to be approved for.

Confirm that you’re eligible

Before all else, you should double- and triple-check on your lender’s site that you meet their eligibility criteria. These points are related to factors such as your age (18 or over), residency (citizen or permanent), income (minimum $22,000 from consistent sources), employment (stable and consistent) and credit history (no defaults or bankruptcies).

Decide what type of loan you want

You must enter the process with clarity on the type of loan that you’re after as a borrower. Most personal loans in Australia are unsecured, which are more easily accessible for a wider demographic and faster to process. Secured loans, on the other hand, use an asset such as a car, boat or motorbike as collateral, expanding their borrowing range and reducing their interest rates.

Pay off your debts

Having a clean slate when it comes to outstanding debts when entering the personal loan process is a great way to increase your approval chances and borrowing power, as well as potentially reduce your interest rate. This is because having debts successfully repaid will raise a lender’s confidence in you, as well as maximise your disposable income with which to pay off your loan.

Frequently asked questions about applying for personal loans

How do I apply for a personal loan online?

Many personal loans in Australia come with entirely online processes, which makes them easier to complete. Lenders’ application forms will be digital and the documents you’re required to send through will either also be accessed online (such as bank statements) or scanned through as images. You’ll also sign your loan contract electronically, meaning you can avoid messy paperwork throughout the entire process.

Can I apply for a personal loan as a self-employed worker?

Yes – self-employed workers are eligible for loans just as any other borrower would be. Tax returns, usually the two most recent years’ worth, will be required as part of your application in place of payslips. However, if you can’t produce these, you may have to look to a low doc personal loan, which utilises alternative documents in their place. It’s important to note, also, that you’ll usually need to have been trading for at least two years to qualify for a loan.

Is the application different for secured loans compared to unsecured?

Not really – the only real difference for secured loans is that you’ll need to submit information relating to the asset that you decide to use as collateral. For instance, if you were securing your loan against your car, you’d share details about its make and model, age and condition. Your lender will then determine whether it’s suitable to serve as collateral.

How do I apply for a line of credit?

In much the same way as you would a personal loan. Lines of credit are an option preferred by some borrowers thanks to the flexibility that they bring, with funds able to be withdrawn whenever you need them and interest only charged on the amount outstanding. However, interest rates are typically much higher on personal lines of credit than standard personal loans in Australia and come with lower approved limits, typically around $20,000 compared to a maximum $100,000 loan.

Should I choose a loan with a fixed or variable rate?

Fixed interest rates on personal loans are the most commonly occurring and popular amongst borrowers, as they offer stability when it comes to your repayments by locking your rate in from the beginning of your agreement. They also typically start at a lower base than their variable counterparts. The primary benefit offered by variable interest is that it puts you in a position to capitalise on decreases in interest rates, which could help you save throughout your repayment period.

Can I apply with my partner?

Yes – applying for a personal loan with a co-borrower is often a great way to increase your chances of approval and borrowing power. This is because, with two income streams, you’ll significantly increase your combined disposable income and add greater security to the agreement overall. Lenders will be more willing to approve co-borrowers, especially partners, as they’re seen as a safer prospect to loan to.

What do personal loan fees cost?

There are several fees which may apply to your loan, so it’s important to consider the cost of these before committing to a particular offer. As mentioned previously, many lenders will waive one or more of these charges on their loan deals to incentivise you to select them, which can help you save overall. The fees you may face on your loan include:

  • Establishment fee: up to $595
  • Ongoing monthly fees: up to $10 per month
  • Late repayment fees: $15 to $35
  • Early repayment fee: depends on time left to run on your loan (usually not charged)

Helpful personal loan guides