Non-Conforming Personal Loans

Read about your personal loan options for less standard individual financial situations and compare with Savvy.

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, updated on October 4th, 2023       

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What are non-conforming personal loans and how do they work?

Non-conforming personal loans are a type of personal finance specifically catered to applicants who, as the name suggests, don’t conform to the typical criteria requirements set by lenders as part of the loan process. There are two main categories when it comes to non-conforming personal loans, which address the two main reasons for individuals seeking this type of finance: low doc personal loans and bad credit personal loans.

Low doc personal loans

The first reason why you might seek a non-conforming personal loan is that you don’t have the required documentation to apply for a standard personal loan. This is typically the case for self-employed workers, as their income isn’t obtained via traditional means (e.g., PAYG payslips).

Low documentation (low doc) personal loans are designed to afford workers in this position the opportunity to supply alternative documents. In addition to identification documents like passports and driver’s licences, these typically include:

  • ABN or ACN: your Australian Business Number or Australian Company Number will be required by your lender to assess the nature of your business and how it operates
  • GST: some lenders will require that your business’ revenue has been registered for GST for a minimum of between 12 and 24 months
  • Business activity statements (BAS): BAS documents are required for businesses registered for GST, as it helps them record incoming and outgoing funds to determine their GST bill or refund
  • Profit and loss statements: a document that lays out your company’s income and expenses, of which your lender may require anything from a quarterly to annual statement
  • Bank statements: another method of displaying your company’s finances which your lender is likely to need at least the most recent few months’ worth of. This can be business or personal banking, or both
  • Income declaration: a declaration signed by your accountant confirming your income and that it’s true and accurate

These loans come with higher interest rates and fees than standard personal loans, as the lack of more “secure” documents like tax returns and payslips increases the lender’s sense of risk with the loan.

However, the borrowing range for these loans remain the same, with maximum amounts of around $50,000. They can also be turned around quickly because of the less complicated nature of their documents, allowing for fast and easy finance solutions for borrowers.

Bad credit personal loans

The second main purpose someone may require a non-conforming personal loan is due to a bad credit rating. Lenders look to credit scores as one of the most important indicators of your reliability as a borrower, so not having a great, good or fair score can sink a personal loan application before you’ve even started. Specialist bad credit lenders have entered the market in recent years to remedy that situation, affording individuals in need of financing access to funds.

In terms of their structure, these loans are essentially the same as other personal loans. As part of the application process, your credit history will be assessed, which is primarily done to ascertain your current financial situation and any recent defaults to determine whether you’re capable of servicing the loan.

Like low doc loans, bad credit personal loans are seen as being riskier for the lender, which in turn leads to an increase in their rates and fees. Borrowing power is also decreased significantly: bad credit borrowers will only have access to a maximum of $10,000 in loan funds and can typically repay them over a maximum of two to three years.

Despite all of this, though, these loans present as one of the most viable options for people with bad credit looking for flexible finance solutions.

Maximise your non-conforming personal loan approval chances

Common non-conforming personal loan queries

Which types of lenders offer non-conforming loans?

Specialist online lenders – these lenders are able to cater to more diverse borrower profiles than larger lenders such as banks, who tend to limit their products to applicants with stronger financial positions. You can find and compare non-conforming offers today through Savvy’s panel of partnered specialist lenders to lock in a loan to suit your needs.

What can I use a non-conforming personal loan for?

Like any other personal loan, how you use your non-conforming personal loan is up to you. Whether you wish to consolidate existing debts, renovate your home, pay unexpected medical bills or simply go on holiday, a personal loan is one of the most versatile types of finance.

Can I get a low doc personal loan if I’ve just become self-employed?

Probably not – if you’ve just become self-employed, you’re unlikely to be able to produce the documents required for a low doc personal loan. Similarly, bad credit personal loans usually require employment in a given job for at least three to six months.

Can I get guaranteed approval for a non-conforming personal loan?

No – all accredited lenders in Australia must abide by strict laws surrounding responsible lending. As a result, all applications must be assessed on their merits and (in theory) carry with them a chance of rejection.

Should I look to a non-conforming personal loan if I’m a temporary resident?

Not necessarily – there are personal loans available to temporary residents, albeit from only a select few lenders and with restrictions on borrowing amounts and loan terms. The latter is particularly important, as you can only take out a loan with sufficient breathing room between the end of your loan and the end of your visa. However, if you don’t meet some of your lender’s other criteria, you may be required to turn to a non-conforming loan instead

How is my interest rate calculated?

How much you’re charged in interest will be based largely on aspects of your profile, such as your credit score, past borrowing, employment and income. The amount you’re borrowing also factors into this, although is less impactful than an applicant’s personal financial situation in this regard.

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