An insight into securing loans
There have been moments in life where taking a loan felt more of a necessity. Be it for any purpose such as education, wedding or even travelling.
Secured personal loans are less risky and come with lower interest rates. So you don’t need to worry about repayments unless you are broke.
As Aussie people are securing loans with other lenders rather than big banks, the article dives into general queries relating to securing a loan.
Do you qualify?
Way before you apply for loans, it is vital to understand whether you qualify or not. The following pointers will help you understand your qualifications better:
- Must be 18 years old
- Must be living in Australia
- Must possess Australian or New Zealand citizenship
- Must be able to repay, meeting income requirements
- Have a consistent income source
- No history of bankruptcy
For what purpose can you take a loan?
One can take loans for various purposes, considering the requirements at different stages in life. The purpose should be legal. Now obviously, you cannot secure loans for gambling purposes.
Here are a few common reasons people take loans for:
- To pay medical bills
- For vacations
- Buying a vehicle
- For paying bills in case of significant events such as wedding
- For home renovations
- For education
These are only a few common reasons that have been listed. However, in life, the list goes beyond the pointers mentioned above.
Take recommendations from an expert:
Things to keep in mind for fast approval are:
1. Proper banking conduct
- Avoid large amount withdrawals
- Do not fall into gambling. Not only are there chances your loan will get rejected, but it can also call for some legal actions by banks.
- Do not overdraw from the account.
- Pay your bills timely to prove authenticity.
- All transfers should be straightforward to show transparency and raise no eyebrows.
Loans add to the expense you are already bearing. Proving bank about your saving can help in fast approvals. It shows you are ready to manage repayments.
You don’t have to deposit your saving to secure a loan. Instead, it is a way to showcase your ability to repay.
3. Income consistency
The lender may ask you to show proof of income statement. It is advisable to keep a clear track of income records. These are crucial documents while securing a loan.
Ask your employer to provide you with records if they haven’t shared them with you already.
A lender can’t simply give away a loan because you need it. An essential part of the process is a proper investigation to understand the financial background.
You will need to submit your address proof for better chances of approval.
Mistakes you can avoid before moving ahead with the process
Multiple inquiries with the banks reduce credit scores. When you apply for finance, it gets recorded as a credit score. Applying multiple times for loans reduces the credit score upon which the bank sometimes doesn’t approve loans.
People often make the mistake of applying to multiple sources to understand which place offers lower interest rates. They end up not qualifying anywhere due to poor credit scores.
If you are not great with budgeting, it is advisable to take a loan of a lesser amount or extend the repayment cycle to reduce the stress on repayment on each cycle.
Secured personal loans offer lower interest rates and are usually attractive. But don’t get tempted with lower interest rates. Seek professional advice before jumping to a decision.
Always remember you need to ‘secure’ a loan against an asset. So if you don’t want to lose your asset, always pay your instalments in a timely manner.