Step 1 – Research, research, research
Don’t even think of applying for anything before comparing what’s available on the market using our CANSTAR comparison tools for personal loans.
- Compare personal loans for the amount you’re thinking of.
- Read our guide on what to think about when choosing a personal loan.
- Use our personal loans repayment calculator and work out what kind of repayments and interest rate you could afford on top of your normal budgetary expenses.
- Decide on whether you want a secured or unsecured
- Get a copy of your credit rating to make sure you’re not going to be rejected for your loan application and get a black mark on your credit history.
“We once applied for a personal loan of $35,000, which was used to pay for an operation. We didn’t have health insurance at the time as we couldn’t afford it.”
Step 2 – Online application, phone application or postal form application
Applying online or over the phone is a simple process, and usually pretty quick, too.
You’ll need to:
- Be an adult.
- Have a good credit rating.
- Be an Australian citizen or permanent resident.
- Not currently an undischarged bankrupt.
- Have proof of an Australian home address.
- Provide proof of your income – usually payslips or your ATO notice.
- Provide details about the car you’re buying – registration number, VIN, purchase price, and dealer or seller’s details.
- Provide details of any other loans or credit cards that you have – other debts, basically.
If you’re not already a customer with that bank, you’ll also need to provide significant proof of your identity. Things you might need to provide include a passport or driver’s licence if you have one, Medicare card, birth certificate, and/or rates bill.
“Frankly I was quite shocked at how easy it can be – most lenders allow you to begin the application process online and they have great tools to help you decide what amount and term would be best, with the total interest repayments usually made clear.”
Step 3 – Verification and conditional approval
After your online application, you can usually expect to hear back from the bank – one way or the other – within a couple of business days. They will ask you to review their supporting documentation such as the PDS for the loan, and to send them copies of some documentation of your own:
- Provide proof of your income – usually payslips or your ATO notice.
- Provide details of any other loans or credit cards that you have – other debts, basically.
- Provide proof of identity.
You can usually post in copies of this documentation, or make a visit to a branch. Just make sure there actually is a branch near you!
“The lender I wanted to apply to was based in New South Wales and did not have any branches close to my home in Queensland. They insisted I would need to visit a branch to proceed with the application. I didn’t realise when I began looking for a loan that applying to one of the smaller institutions might present such a problem.
In the end the 800 kilometre road trip put me off taking my application to the next step. It was a shame because the loan seemed to represent great value. After missing out, applying for another loan with a higher interest rate just didn’t sit well with me, so I decided to save up for a car instead!”
Step 4 – Final approval and acceptance
The contract will now be emailed or posted to you. Sign and return the loan contract paperwork by posting it or via scanning and emailing it.
Your loan will now be approved and accepted by the bank within 24 hours of them receiving the contract from you.
Step 5 – Drawdown
The funds are “drawn down” into your account so that they are now accessible by you for the purpose of the loan.
If something seems fishy…
If at any stage you feel that a lending institution has not followed these steps in a transparent way, or you feel uncomfortable, do not go one step further.
Hold off, and feel free to contact the Financial Ombudsman Service of Australia or the Credit and Investment Ombudsman. They are both free and independent service that commonly resolves disputes between customers and their lending institutions. They can confirm for you whether the lender if following a normal process or is trying to pull the wool over your eyes.
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