Taking a loan for your home, wedding, car, or anything that has to do with you and your family comes under personal loans. This loan is easy for an individual to use borrowed money from a bank to meet their long-term goals and repay as per the schedule.
Unlike other loans, it is an unsecured loan that is lent to the borrower without any collateral damage. The amount allowed for an individual depends on their income and capacity to repay.
Before applying for a loan, you must determine whether you are eligible.
Eligibility criteria for Personal loans.
Income
The lenders set a minimum income margin for borrowing loans; for example, it could start at 35,000 AUD per annum. They might also require a regular source of income proof so they can trust that you will repay on time.
In the case of regular income requirements, you must ensure that your income is dependable enough to repay your loan on time.
Age and residency
Any loan requires the individual to be above 18 and must be an Australian citizen or a permanent resident. There are loans for people working on a temporary visa, but it will demand additional requirements.
Employment
The employment requirement is usually a regular income source; if you are a casual employee or a freelancer, there are other options.
If you are self-employed, then they may ask for other solid details. In any employment, you will be required to have stayed in that role for a decent amount of time.
Credit history
Good credit history will always be preferred over a negative one, so make sure you have a good transaction history. In case of bad records, the bank will not allow you to borrow any loans.
Although options are available for bad credit history, banks lend money to financially struggling individuals who may not come under the usual traditional banks.
Debts, expenses, and assets
These factors also play a significant role in personal loans. Substantial assets can help you get approval faster, while your expenses based on credit cards and store cards may become an obstacle.
The bank can always tell you how far your expenses go even if you try to underestimate it for approval, as they have other data to prove it. Your previous debt history can also be problematic; hence, clearing old debts before applying for a new loan is advisable.
Loan security
Although personal loans are unsecured, taking a vehicle loan will require you to give proof of your assets. If you are using a secured loan and your security asset is a car, it usually will have an age limit.
However, there are lenders for used cars which might not be available in a traditional bank.
To conclude.
Applying for a loan, in general, is stressful, with a lot of formalities involved. A personal loan also requires many proofs and approvals before you can get a bank to agree. It is much easier if you fulfil all the above criteria.
When applying for a loan, check your financial state and think it through. You must make cautious calculations to not end up in any debt because it is a pit that takes forever to get out of.
