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How to Apply for a Personal Loan

Updated: 8 hours ago

Applying for a personal loan can be a daunting exercise, so making sure you’re well prepared will help alleviate any worries you might have about getting loan approval.

1. Make sure you are eligible to apply

In order to take out a personal loan you must meet a few basic requirements. Generally, you’ll need to:

  • Be at least 18 years of age

  • Meet minimum income requirements

  • Be an Australian citizen, permanent resident, or visa-holder

2. Decide how much you need

It’s important to remember not to borrow more than you can comfortably pay back, as overextending can leave you much worse off in the future. Using a borrowing calculator can help you find out both a realistic loan amount, and what your repayments are likely

to be based on your financial situation.

3. Check your credit score

Personal loans - particularly unsecured personal loans - rely largely on your creditworthiness. It is a good idea to check your credit rating, which you can do for free at one of the three major credit reporting agencies - Equifax, Experian, or Transunion. These enquiries won’t impact your creditworthiness, but will allow you to correct any inaccuracies in your credit report.

4. Choose a personal loan

​​Once you have a copy of your credit report you can make a more informed decision on which personal loan is most suitable. Contact your lender to find out if they require a minimum credit score and whether they employ an income threshold.

Most lenders will offer to prequalify you for a loan, which although does not equate to a loan offer, will not effect your creditworthiness. It will also give you some idea of the loan products available to you.

The type of loan you apply for will usually depend on what you are intending to do with the money. For example, if you are using the loan to finance the purchase of a car you might opt for a secured loan, using the car as collateral.

Whether you decide on a fixed interest rate or variable rate loan will depend largely on your ability to service the loan earlier than the loan term. If you plan to make extra repayments during the life of the loan, you may decide to go with a variable rate loan to avoid extra repayment charges associated with fixed loans. Checking the comparison rates will help to evaluate the actual cost of the loan when fees and charges are considered.

5. Get your documents ready

Before beginning your application, contact your lender for a checklist of the documents they require in order to process your loan. Although lenders differ, you will want to have the following ready:

  • Proof of income, usually in the form of payslips

  • Utility bills addressed to your residence for proof of address

  • Bank statements and other documents showing assets and liabilities

  • Driver’s license, passport of birth certificate


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