Personal Loans

What is a personal loan?

A personal loan is any amount of money you borrow to use for any purpose you may have. Unlike loans that specify what you must use the money to do, a personal loan does not have such restrictions. 

With a personal loan, you are free to spend the money on your wedding preparations, throw an end of the year party, pay school fees, buy a car or whatever else you can think of. Personal loans are often offered by banks, credit unions and online lenders. 

The amount you borrow must be paid back within a given period of time. You also incur personal loan interest rates on the amount you take out as a loan which is why it is quite important that you pay back according to the agreement. Late payments or failure to make payments may lead to legal action or a poor reflection on your credit score. 

How can you get a personal loan?

The process of getting personal loans Australia differs from one lender to another. Below are some of the most common options you have to take out a loan.

Credit unions 

A credit union is a financial institution that is formed and run by members of the public to help support each other. Members often come up with their own unique rules and regulations on how to run such a union. However, all the rules and regulations must be compliant with the law of Australia.

To receive a personal loan from such an institution, you must first of all be a member. That means you may have to apply to join. You will then be required to make some initial contributions before you are eligible to apply and receive a personal loan.

Mainstream banks 

There are many mainstream banks that may be willing to give you a personal loan. However, such banks are often more willing to give loans to their members. This means you must have held an account with the particular bank for a significant period. Your account must reflect some level of financial stability or predictability.

You are then required to fill in some paperwork before the bank can carry out an initial review of your personal loan request. If all goes well, the bank will initiate the process of providing you with a loan. The entire process may take at least one week. For large loan amounts, the period of time may be relatively longer.

Online lenders 

Online lenders are by far the easiest financial institutions to work with when it comes to getting personal loans. A particular institution that makes it easy for anyone to get financial help is Ozzie Loans. The personal loan eligibility for this institution involves being a permanent resident of Australia, showing proof of a stable income and having attained the age of 18.

If you meet these basic requirements, you can go ahead and use your device to download the Ozzie Loans app. Register your name and other personal details as required, and then submit a loan request. The bank will use your credit score, financial history and income to come up with a loan minimum and maximum limit depending on your data.

You will be informed about the amount you can receive and receive a prompt on whether you accept the terms of the loan or not. If you agree, the amount is likely to be disbursed into your account within a few minutes. Some loan disbursements may take up to 24 hours, depending on which bank operates your account. 

How much can you borrow as a personal loan?

The amount you can borrow as a personal loan depends on a variety of factors, as noted below.

Credit score and history 

One of the most important factors that financial institutions consider is your credit score and credit history. If you are the kind of person that ensures you pay all your financial obligations diligently and that you clear any outstanding loans as soon as possible, chances are that your credit score and history is good. 

This makes it easier for financial institutions to trust you with large sums of money in the form of a personal loan. A bad credit score and history may limit the amount you get because most institutions will view you as a high-risk client.

Your income 

The amount of money you receive in the form of income can also play a role in the overall loan amount you qualify to receive. Some people have a variety of income streams, but all these are looked at in one lump sum over a given period of time. Other people only have one single source of income. If you are getting a large amount of income, you are likely to qualify for more money than someone who receives a small amount.

Lifestyle and living expenses 

Once you start working or open up a business, your expenses are likely to increase. For example, you may have to pay for your electricity, gas, transportation, school fees, child care and communications. The total amount of money that goes into these activities is taken into consideration.

Your assets 

The value of your assets can sometimes play a role in determining the amount of money you receive in the form of a loan. However, this does not really affect your loan limits if you are taking out a personal loan through an online lender.

How can you increase your loan amount?

To ensure that your loan amount is increased over a given period of time, you are advised to keep your end of the bargain in terms of any outstanding loans. Payback money you owe within the stipulated time will help improve your credit score and credit history.

In case you are having any difficulties in making repayments be sure to contact your online money lender for assistance. It may be possible to work out a solution that does not negatively impact your credit history.

Are personal loans illegal?

Personal loans are legal and can be given to anyone that lives within Australia as long as they meet the minimum eligibility criteria.

Can you refinance your personal loan?

Yes, you can refinance your personal loan. In fact, it is often advisable that you refinance your loans when you are unable to pay them back on time or if you wish to get better bargains in terms of interest rates.