Start by shortlisting and choosing a lender to apply with — you should have already done your research on the personal loan terms offered by different lenders on the market. While it is entirely possible to do this on your own, it is usually best left in the hands of a loan broker who will be able to source suitable loan options on your behalf, saving time and energy.
It’s tempting to apply with multiple lenders to increase the likelihood of getting approved for at least one of them, but doing so may hurt your chances! Lenders have access to Comprehensive Credit Reporting, which allows them to view your credit history when assessing your application — and this includes the number of times you have applied for credit.
Multiple ongoing applications can muddy the waters and make it seem as if you are desperate for a loan. Yes, this can mean that lenders may lose confidence in your application - so you’re better off doing your research first, and then applying.
You’ll need to provide evidence that you meet the eligibility requirements of the personal loan — proof of your identity, residency status, and financial circumstances. Prepare copies of your essential documents for the application so that you’ll have them on hand when the lender requests these documents.
Documents that lenders will ask for include:
- Personal identification documents such as a driver's licence, passport, visa, or Medicare card.
- Recent payslips from your place of employment.
- Bank statements of your personal finances showcasing your spending and saving habits.
- Other documents related to your employment to verify your employment status.
- Outstanding debts from a mortgage or credit card purchases.
- Receipts of living expenses such as rent, utilities, and groceries.
If you are planning to provide collateral for a secured personal loan, you may also be asked to provide documents that prove the value of the assets to be used as security, such as home equity, the valuation of a vehicle, or other investments.
Request a loan application form from the lender and fill it out with details and supporting documents. When doing so, be sure to check that the details of the personal loan are correct, such as the amount you want to borrow, the duration of the loan term, and the frequency of repayments (weekly, fortnightly, or monthly).
In addition to providing supporting documents and personal details, you may also be asked to declare the reason for taking out the personal loan, as well as other statements regarding any other financial commitments you have. You must answer these truthfully to have the best chance of getting your application approved.
If your personal loan application is favourable, the lender will inform you that it has been conditionally approved. This means that your application is very likely to be successful once all of the information provided has been verified. Following verification, the lender will then provide you with a formal loan agreement that includes the interest rate for the personal loan along with the repayment amount.
Spend as much time as you need to thoroughly read through the loan agreement and understand what it will mean for you. Check that the details of the loan meet your needs and ability to repay it, as well as the consequences of missing a repayment. Once you have a good understanding of the loan agreement and are willing to accept it, you can proceed to sign and send on to the lender to accept the loan offer.
If you’re not fully agreeable to the loan terms set out in the agreement, you are not obliged to sign it. Instead, you can choose to negotiate with the lender for better terms or simply restart the application process with another lender.
After signing the loan agreement, the lender will proceed to transfer the requested amount of funds to your account for you to use as you like. The funds are usually transferred as soon as the next day or the day after. All that’s left is for you to make regular repayments from this point on until the end of the loan term.
