How to Get a Personal Loan

Compare personal loans and find out how the process works and how to maximise your chances of approval with Savvy.

Written by 
Savvy Editorial Team
Savvy's content writing team are professionals with a wide and diverse range of industry experience and topic knowledge. We write across a broad spectrum of finance-related topics to provide our readers with informative resources to help them learn more about a certain area or enable them to decide on which product is best for their needs with careful comparison. Meet the team behind the operation here. Visit our authors page to meet Savvy's expert writing team, committed to delivering informative and engaging content to help you make informed financial decisions.
Our authors
, updated on October 4th, 2023       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

Personal Loans Banner

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

What is the personal loan application process?

Once you’ve completed your personal loan comparison with Savvy and chosen your preferred lender, you can move into the application process. There are several steps to this, so you should make sure you tick these off along the way.

Assess the eligibility criteria

Even after you’ve chosen your lender, you’ll need to double check that you meet all of the eligibility criteria and can be approved for financing. The key points you’ll need to meet for standard personal loans are:

  • You must be employed and earning at least $20,000 from stable income sources (although this varies between lenders)
  • You must be 18 years or older
  • You must be a citizen or permanent resident
  • You mustn’t have any prior defaults or bankruptcies

Gather your documents

Ensuring all of your documents are in order before applying is an effective way to avoid delaying the loan funds reaching you. The documents you’ll need for approval are:

  • Photo ID in the form of your passport and/or driver’s licence
  • Your last two payslips
  • Your internet banking account information
  • Details on any outstanding liabilities and current assets
  • 90 days of bank statements, your employment contract and a recent utility bill (to confirm your address) may all be required

Submit and sign off

Once you’ve filled out your lender’s application form and provided your documents, you can submit them and receive an instant outcome in just 60 seconds confirming whether you were successful. If you’ve been approved, your lender will send through a loan contract for you to sign electronically. After you’ve completed this and sent it back, your lender can release the funds to you.

Top tips for maximising your chances of personal loan approval

Have a good credit score (or improve it)

When it comes to lending money, financiers always prioritise borrowers who have a good credit history. This indicates that they’ve been successful and reliable in repaying past debts, which gives lenders greater reason to entrust you with larger loan sums. You don’t have to have a perfect score, though; you can improve it by lowering credit card limits and paying off outstanding debt in the leadup to applying.

Maintain job and income stability

Another aspect of your personal loan deal that your lender will want to ensure is the safety of your income. This is because they want there to be as little risk as possible of your earnings drying up. By showing that you’ve been in the same job for some time and earning a consistent income, you’re more likely to be approved than someone who’s just started a new casual job.

Build your personal savings

Having a strong savings account shows your lender that you’re financially responsible and able to practice discipline when it comes to how you use your money. By adding funds to your account each month in the build up to your loan application, you can boost the likelihood of being approved. Savings also gives you something to fall back on should you lose your income.

Apply with your partner

Finally, if you live with your partner and are looking to take on a shared loan together, it might be worthwhile signing on as co-borrowers for the loan. This means that both of you are tasked with repaying the loan together, which creates more overall income to support the payments and increases your lender’s confidence overall. You may be exposed to a lower interest rate and greater borrowing power with joint loan.

Other common queries around how to get a personal loan

Can I get approved regardless of where I live in Australia?

Our lending partners operate in the online space, so you won’t need to worry about your location in Australia getting in the way of your application. No matter where you live, from far north Queensland to coastal Western Australia, Savvy helps connect you to a lender who can approve you for the funds you need.

How do I find out what I can afford as a borrower?

By using our borrowing power calculator, you can receive an estimation on what you’re likely to be approved for by lenders based on your expenses and financial situation. You can also use our personal loan repayment calculator to get an idea of the types of loan amounts, terms and interest rates that are within what you can comfortably afford, which can help further inform your decision.

How quickly can I receive my personal loan funds?

The entire process from start to finish is a fast one, with the funds being advanced to you in as few as 24 hours after submitting your application. There are things that you can do to ensure this process runs quickly and smoothly, such as gathering all of the required documentation in advance and applying earlier on in the week (to avoid running over weekends).

Can I use a loan for anything I like?

Just about – personal loans are incredibly versatile and are able to be used for almost any purpose, from covering and consolidating unexpected and urgent expenses like medical and vet bills to helping you expand your home to travelling interstate or overseas. There are some restrictions placed on these funds by some lenders, though, such as preventing you from taking out money for gambling or using it to directly pay off small loans.

Should I apply with a guarantor?

A guarantor could help you get approved if you don’t have an extensive borrowing history or can’t quite qualify for the loan you’re looking for on your own. This is someone, primarily a parent or grandparent, in a stronger financial position who guarantees the repayment of the loan. Having a guarantor can increase your borrowing power and lower your interest rate.

Are self-employed workers able to take out a loan?

Yes – even if you aren’t paid via payslips, you can be approved for a personal loan as a self-employed worker. The same application conditions apply to people in this position, with the exception of requiring you to submit your last two years of tax returns instead of payslips. Most lenders will also require you to have been trading for two years before approving personal loan applications.

Am I able to get a personal loan as a temporary resident?

Yes – however, there are fewer lender options at your disposal if you’re applying as a temporary resident. These loans are considered riskier, which means that borrowing ranges are lowered and interest rates are raised. You’ll need to confirm that the type of visa that you’re living on is accepted by your lender and that the length of your loan term is at least a few months shorter than your visa term.

Helpful personal loan guides