How to Get a Personal Loan

Knowing how to get a personal loan may seem daunting at first, but once you know all the facts, it’s actually fairly simple. As long as you meet your lender’s eligibility requirements, especially if you have a high credit score, you can qualify for a personal loan pretty easily.

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It is important to have a good understanding of your options before applying for a personal loan. You should first determine what type of loan you need and work out how much you can afford to borrow. 

The following are factors you should consider in deciding whether to get a personal loan:

1. Eligibility

Make sure you satisfy the eligibility criteria before even thinking about how to get a personal loan. The most basic requirements include Australian citizenship, permanent residency, or a valid visa. You must also be at least over the age of 18. Moreover, many banks and lenders expect you to meet a certain annual income requirement that typically ranges between $15,000 and $20,000. You should also prepare the necessary documents, including valid identification cards and your most recent bank statements.

2. Amount 

If you have figured out how to get a personal loan, the next thing to do is determine if you are capable of repaying it. In general, banks and lenders ask for information about your income, assets, expenses, and repayment commitments to verify your financial circumstances and assess your repayment capacity. You should work out how much money you need, how much you can borrow, and how much you can afford to repay based on your current financial situation. That means taking a step back and considering how much you really need to spend on that home renovation or new car. Moreover, banks usually have borrowing power calculators to help you estimate how much money you can actually secure. It is also important to get an estimate of your prospective loan repayments using a repayment calculator to determine if they are manageable.

3. Money habits

It is imperative to have a good account history of your income and expenditures before figuring out how to get a personal loan. Banks may use this information to assess your spending habits and determine if you can repay a personal loan. A few simple ways to demonstrate your repayment ability include showing that you receive payments into your account, pay your bills on time, and set money aside for savings. You should also avoid overdrawing your account since it indicates that you might struggle with money management. 

4. Credit score

Your credit score or credit rating is an important factor in the approval process. This score takes into account personal and financial information found in your credit report, reflecting your creditworthiness. It is important to know your credit score before applying for a personal loan to understand your current financial capacity and have your credit score improve if necessary. You can build your credit score by paying your bills and loan repayments on time.

5. Payment plan.

Taking control of your finances starts with paying your bills on time. It is important to make it a habit to pay your bills by the deadline because it can reduce your stress, save you money, and improve your credit score, which will enable you to get lower-interest credit in the future. You should also have a plan to pay off your loan faster, such as making extra payments if you luck out on money or making early payments. This can help you save money in the long run. Note though that some lenders charge penalties for making extra or early payments, so you need to check with your lender first.

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How does your credit score affect your personal loan?

A good credit score increases your chances of getting approved for a personal loan. Of course, there are other factors that come into play, but a positive credit history undoubtedly gives you a leg up when deciding how to get a personal loan. It also enables you to get competitive deals on loan interest rates, saving you money in the long run. 

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How much can I borrow with a personal loan?

There are several factors to consider when determining how much money you can borrow with a personal loan. You should first consider what type of loan best suits your needs and how you plan to use it. You should also understand that banks and lenders may request to look into your financial situation to see if you can comfortably pay off your loan on time.

There are generally two kinds of personal loans available in Australia:

Unsecured personal loan

This type of personal loan does not require you to offer an asset as collateral. It lets you borrow anywhere from $4,000 to $80,000 for various purposes, including debt consolidation, home renovation, or car purchase.

Secured personal loan

This type of personal loan requires you to offer an asset as collateral – be it your car, home, or boat. It lets you borrow a significantly larger amount than an unsecured loan depending on the value of the asset you provide as security. If you are buying a new car, you can use it as collateral on the loan. Note though that if you default on your payment, the asset you used as collateral could be repossessed.

Many banks and lending institutions have borrowing power calculators accessible through their websites. You can use these nifty tools to get an estimate of how much money you can borrow if you get approved. 
Regardless of which type of loan you plan to take out, a positive credit score can get you a better rate on your personal loan. Use GetCreditScore to get your free credit score now! Sign up today and get exclusive personal loan offers!

How to get a personal loan?

Knowing your credit rating is the first step towards securing a personal loan. GetCreditScore is a leading online platform that lets you check your credit score in a few easy steps. This information can also help you assess your eligibility for a home loan, car loan, or credit card. Create an account today and gain access to special personal loan offers!

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.