They say the best things in life are free, but that’s not much use when your heart’s set on a dream wedding, overseas trip, or a new kitchen. For anything that costs money, you’re going to need, well, money.
Now, clearly saving is an option. And there are plenty of high-interest savings accounts to choose from. Some of them even offer bonus interest when certain conditions are met. But, let’s face it, there are times when you just don’t want to wait. And others (we’re looking at you emergency dental surgery), when you can’t.
In such circumstances, a personal loan could be just the ticket. This article looks at whether a personal loan is the right choice for you, the steps involved in applying, and how to maximise your chances of getting loan approval.
Decide on your goals
Purpose of the loan
First things first. What do you need the loan for? A personal loan is suitable for many types of large purchases, but it isn’t always the answer. Here are some of the things that personal loans are most commonly used for:
The loan amount
Secondly, you’ll need to decide how much money you want to borrow. This will depend on a number of factors. These include:
- How much is the item/holiday/wedding going to cost, or how much debt are you looking to consolidate into the new loan?
- Are you looking for a loan to pay the full amount, or will you use your savings to pay part of it?
- How much can you afford to borrow and pay back safely?
Once you’re clear on your goals, it’s time to decide which type of loan is right for you.
Decide which type of loan is right for you
There are a number of different types of personal loans but the main choice will be between a secured or unsecured loan.
Check out the link above for a detailed account of the differences between the two.
Calculate how much you can borrow safely
Before you start the application process, it’s wise to have a clear idea of how much you can afford to borrow safely.
A good way to do this is by using a personal loans repayment calculator. Select the type of loan you’re interested in, the amount you want to borrow, the loan term (from one to seven years), and your preferred repayment frequency. You can also give an estimate of your credit score for a more accurate idea of your possible repayments.
Once you have a rough idea of the repayment amount (please note, calculator results are estimates only and are based on the interest rate applicable at the time), you’ll be able to see whether you have enough disposable income to comfortably repay the loan by plugging it into a budget planning calculator.
Ensure you meet the eligibility criteria
The last thing to do before submitting an application is to check that you meet the eligibility criteria. Applicants for a Great Southern Bank Personal Loan must:
- Be at least 18 years of age.
- Be a permanent resident of Australia.
- Receive a regular income.
- Not have been bankrupt or insolvent in the last five years.
Submit an application
How you submit your personal loan application will vary from lender to lender.
With Great Southern Bank you can apply:
Before you start, it’s a good idea to have all the information you need to hand so you can complete the application in one go without having to update it at a later date.
Each time you submit a loan application, it’s added to your credit record, so it’s important to get it right first time around. It’s also worth remembering that to complete the application, you need to consent to having a credit check carried out.
For the application form you’ll need to provide information, including:
- Personal details of each applicant (name, date of birth, address, contact details etc).
- Number of dependants each applicant has (a dependant is anyone who is supported by you financially, whether they live with you or elsewhere).
- Proof of identification (driver's licence or passport, or a combination of birth certificate and Medicare card).
- Employment details (current and potentially past employment).
- Details of all your income e.g. salary, investment income, rental income, child support you receive, superannuation/annuities income. Application forms will either ask you for ‘gross’ or ‘net’ income. Gross means your income before things like tax and superannuation payments are deducted. Net income is your take-home pay after deductions have been made.
- Details of your living expenses, e.g. rent, utility bills, groceries, fuel etc.
- Details of your other financial obligations like a home loan, other personal loans, credit card balances. Other types of credit arrangements you have like Afterpay, Zip Pay or VetPay should be listed too.
- A list of your assets. These are simply things that you own, like a property, home contents, cars, investments, or savings and superannuation you’ve built up.
It’s really important to include as much detail as possible with your application. Doing so will mean the lender can make a realistic assessment about how much you can afford to borrow safely.
Once your application has been submitted, it will be assessed against the lender's criteria, and you’ll be informed if your application has been successful or not.
Provide documents to support your application
If you’ve been given conditional approval, you’ll be asked to provide documentation to support the application. The lender will specify which documents you’ll need to provide and how recent they need to be.
The documents you’ll be asked for could include:
- Proof of income such as the most recent pay slips, employment contracts, rental property statements, child support agreements, government benefit statements, etc.
- Proof of other financial expenses and general living expenses such as your most recent transaction account statement or loan account statements.
If you’re making a joint application, you’ll need to provide documentation for each applicant.
Receive your loan decision
If your application and supporting documents meet the lender’s criteria, the loan will likely be approved. At this point, the lender will provide you with a loan contract confirming the loan details and any other terms and conditions.
How the funds are delivered by the lender will depend on the type of loan. For example, the money could be transferred electronically to your transaction account or paid via BPAY. Any details specific to your type of loan will be explained in your contract.
You can check with the lender when your first loan payment is required, and from then on how often they need to be made – weekly/fortnightly/monthly. Many personal loans will also allow you to make extra repayments if you have some spare cash, but make sure you check whether there is charge for making extra payments or paying off the loan early.
Once you’ve done your research, chosen a suitable loan, completed the application with supporting documents, and had it approved, all that’s left to do is to use your loan for its intended purpose.
Ready to apply?
If you’re ready to apply for a Great Southern Bank Personal Loan, you can do so online right now. Alternatively, feel free to give one of our friendly team a call on 133 282 or pop into your local branch for a chat.