The Ultimate Checklist Of Things To Review Before Taking A Personal Loan

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Personal Loan

Personal financing can be your saviour when making a big-ticket purchase for yourself or your family. Maybe you finally want to take that family vacation to get away from the monotony of work? Or perhaps you want to buy a car? 

Personal loans can be the exact financial solution your situation needs, and the best part, they are usually collateral-free. Although, these loans do have stringent eligibility requirements to avoid default.

Inability to pay the instalments will rack up hefty interest fees. In fact, over a third of Australian borrowers are struggling to repay their loan instalments on time. 

Specific precautionary measures must be taken before availing of the loan amount to avoid repayment default at the end of the month. Below are the tips that will help you!

 

Top tips to consider before availing of personal financing

The list of things you must consider and get in order before availing of a loan are as follows:

 

Please ensure you meet the minimum eligibility requirements and possess the necessary documents.

Before approaching a financial institution for dispersing a loan under your name, first, make sure that you are eligible. These eligibility criteria vary from institution to institution, but here is the general outline.

  • You must be at least 18 years of age. 
  • It would help if you hold Australian or New Zealand citizenship. If not, an Australian permanent residency or a valid visa permit will also do. 
  • You must be residing in Australia. 
  • You must have a good credit rating. 
  • You mustn’t be going through bankruptcy.

 

Apply only for how much you need

While applying for a loan, you might be tempted to borrow extra money and go overboard with the loan amount. It might seem easy to pay off the excess via instalments, but you will pay more than you intend to. 

Try and avail of the lowest possible loan amount to make comfortable monthly instalments and pay off the debt within the stipulated tenure. 

As a result, the repayment won’t impact you as much financially since you have borrowed how much you could afford to pay back precisely.

 

Make sure you have a good credit score.

Availing of any loan in Australia demands a good credit rating since it is the crucial indicator of a borrower’s creditworthiness. A high credit rating indicates that you make all your debt instalments on time and are a trustworthy borrower. 

The various credit score ranges that are considered in Australia are as follows:

 

Credit score range

Equifax

Illion

Excellent 833 – 1200 800 – 1000
Very good 726 – 832 700 – 799
Average 622 – 725 500 – 699
Fair 510 – 621 300 – 499
Low 0 – 509 0 – 299

 

Enquire about additional costs 

Before availing of any personal loan, make sure that you accurately gauge the costs associated with the loan. This way, you can avoid worthless expenses and spend less on repayment. Some of the charges that you must be on the lookout for include:

  • Lending establishment fee
  • Withdrawal fees
  • Insurance
  • Servicing fee
  • Early repayment fee
  • Early exit fee

 

Wrapping up 

While availing of any personal loans from any Aussie financial institution, keep these four essential tips in mind!

Racking up interest and the inability to repay loans on time can significantly impact your credit rating. Moreover, you will have to pay significant amounts of money as interest Personal Loan charges while clearing the loan, posing another major issue of missing monthly instalments. 

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