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Published February 28, 2023
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How To Apply For a Personal Loan

Applying for a loan can be quicker and easier if you’re prepared and know what to expect.

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Even if you’ve researched and checked your eligibility, applying for a personal loan can still feel overwhelming. But learning how the process works and what lenders are looking for can help you approach it more confidently while boosting your chance of success.

» MORE: How to choose a loan suitable for your needs

Decide how you want to apply for the loan

There are usually three ways to apply for a loan — over the phone, in person, or online — but not all lenders will offer all these options. While online loan applications are typical these days, bear in mind some banks or finance companies still require you to confirm your identity in person, either at a branch or at an Australia Post outlet.

Gather your paperwork

One of the first things you’ll need to do when getting ready to apply for a loan is to gather documents that prove your identity, residency status and financial situation. 

Typically, you’ll need to provide the following:

  • Identification documents to confirm you’re aged over 18 and an Australian resident, such as your driver licence, passport, visa or Medicare card. 
  • Bank statements to show your incomings and outgoings, as well as your savings.
  • Payslips from your employer to verify how much you earn.
  • Current and past employment details to establish that you’re in a stable work situation.

Your lender may request fewer forms of ID if you’re an existing customer, but make sure you have your customer or account number on hand.

You’ll probably also need to list the value of your assets, liabilities and expenses to give the lender a clearer picture of your overall financial health. Below are some things you might include:

  • Assets or items of value that you own, such as a vehicle, property, boat, term deposits, savings and other investments.
  • Debts you have, such as other personal loans, outstanding credit card debts, buy now, pay later (BNPL) balances or home loans.
  • General living expenses like rent, groceries, utilities, transport, school fees, mobile and streaming services.

If you’re taking out a personal loan to buy a car, you’ll likely have to provide additional paperwork, such as a tax invoice and evidence of comprehensive car insurance.

Complete the loan application form

With your personal and financial details easily accessible, you can start to fill out the loan application form. 

While forms vary between lenders, they’ll typically ask for the following information:

  • Loan details. You’ll need to specify the loan amount, the number of years or months you’d like to repay it, and whether you’ll make weekly, fortnightly or monthly repayments. In addition, many lenders will also want to find out why you’re borrowing.
  • Personal information. This might include your name, title, date of birth, driver licence, marital status, number of dependants, and residency status. 
  • Living arrangements. Lenders generally want to know where you live now, your previous addresses, and whether you own your home or are renting or boarding.
  • Contact details. This can be either your mobile or your email address.
  • Employment details. Lenders are interested in who you work for, what you do and whether you’re working full-time or part-time.
  • Income, expenses, assets and liabilities. You can use your lists from the previous step to share details about what you own and owe and how you estimate your monthly income and expenses.

If you’re applying online, you may be required to upload identification and supporting documents electronically.

Finally, lenders might try to establish your financial stability by asking whether you’re behind in any loan or credit card payments, if you’ve ever been bankrupt, and what upcoming changes you expect with your income or employment.

Review and sign the loan agreement

Most lenders will let you know promptly whether your loan application has been conditionally approved. You’ll receive your indicative interest rate and repayment amount, and once the lender successfully verifies the information on your form, they’ll send you a formal offer and a loan agreement.

A loan agreement is a legally binding contract that sets out all the borrowing conditions. Reviewing it carefully lets you decide whether the arrangement fits your situation and financial goals. Remember, you don’t have to take up a loan just because you’ve been approved.

In particular, look out for clauses relating to:

  • The principal or how much you’re borrowing, and whether there are any restrictions on the use of loan funds.
  • Costs such as interest rate, fees, and the annual percentage rate (APR), a rate that helps you work out the true cost of a loan.
  • The loan term or when it must be fully repaid.
  • Your repayment schedule, as well as payment amount and method.
  • What happens if you miss a payment.
  • How you and your lender can resolve legal disputes.

It’s a good idea to fully understand and feel comfortable with your obligations under the agreement before signing it. Once signed, you’re deemed to have accepted the loan offer.

Get funded and start repayments

Loan funds usually arrive soon after final approval and offer acceptance — typically within one or two business days — sometimes even within 60 minutes. The money is generally deposited into your nominated account, though funds may go straight to the car dealership or private seller for car loans.

Your repayment schedule begins when you’ve received the funds. For example, if you choose to pay off your loan fortnightly, your first repayment is due a fortnight after loan settlement.

What to do if your loan application is rejected

If your loan isn’t approved, it’s crucial to find out why before trying again. Making multiple loan applications quickly can work against you as lenders will see you’re struggling to get credit.

You can check your credit report to make sure it’s correct, pay off some debts to get them under control and create a budget to grow your savings. As your financial health improves, so will your chances of securing a loan.

Frequently asked questions about applying for a personal loan

Can I apply for a personal loan online?

Yes. Almost all lenders will allow you to apply online, but some may require you to verify your identity in person. 

Does applying for financing affect your credit score?

Yes. When you apply for credit, the lender submits a request to the credit rating agency to view your credit report, which can lead to a short-term drop in your credit score.


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