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You won’t be able to get a short-term loan without a quick check of your credit history in Australia; ‘no credit check’ loans don’t exist among reputable lenders. If you’re worried that your bad credit may hold you back, though, don’t be. Even a very bad credit score is unlikely to prevent your loan application from being approved, so a credit check is nothing to fear.
Credit checks don’t just check your credit score, but provide your lender with a complete picture of your borrowing history. These types of checks display things like credit enquiries, credit card limits, payment history and any past-due accounts in your name. This allows your lender to better understand your situation, including what you can afford to borrow.
As part of their responsible lending obligations, lenders have a duty of care to potential borrowers to ensure a short-term loan won’t land them in financial hot water. That’s why credible lenders won’t offer ‘no credit check’ loans.
While there’s no need for physical paperwork when applying for a fast and easy loan, you’ll still need to submit some digital documents to get an instant outcome on your application.
Lenders will request some personal identification to verify your identity as part of your initial application. Digital copies of these can be safely uploaded to a secure portal. You’ll usually be asked to provide at least one of the following:
As part of this initial application, you’ll be asked to provide personal details such as your name, date of birth, residential status, employment status and how much money you earn after tax.
Lenders will run a check of your income and expenses to verify this information. As part of this, you’ll be asked to provide read-only access to your internet banking statements from the past 90 days so your lender can review them.
If you’re offered formal loan approval, your lender will email you a digital copy of your loan agreement to sign and return. This can be completed electronically and, once they receive it, your funds can be released soon after.
Short-term loans in Australia allow you to borrow between $300 and $5,000 and you can choose between term options ranging from 16 days to two years, depending on the size of your loan. Loans up to $2,000 come with borrowing terms of up to 12 months, while loans above $2,000 have term limits of two years. Consequently, your repayment term will play a part in how much you’ll pay over the life of your loan.
Choosing a shorter repayment term will help you save money on your monthly fees. Short-term loans come with a fixed establishment fee and a rolling monthly fee. The establishment fee is calculated at 20% of your loan amount (capped at $400 for loans of more than $2,000) while monthly fees are calculated at 4% (capped at 48% per year for loans of more than $2,000). For instance, if you borrowed $2,500, repaying over nine months instead of 12 would save you $300 in monthly fees.
It’s important to remember that the value of your regular repayments will be higher the shorter your term is. Borrowing $3,000 over nine months instead of 12 would increase your repayments by about $94 to $497 per month.