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
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.
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).
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.
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.