A personal loan can be a great way of getting the extra financial boost you need to reach a goal or make exciting things happen in your life. And the application process can be very straightforward – especially if you know what to expect and what information you’ll need in advance.
A step by step guide to the process
1. Decide on your goals Show content
Purpose of the loan
First things first: what do you need the loan for? A personal loan is suitable for many types of large purchases but it isn’t always the answer. Here are some of the things that personal loans are most commonly used for:
- Buying a new or used car
- Consolidating debt
- Renovation/Home improvements
- Health/Medical expenses
For smaller purchases, other types of finance like a credit card, which has different features and benefits, might be a better option.
The loan amount
Secondly, you’ll need to decide how much money you want to borrow. This will depend on a number of factors, including:
- How much is the item/holiday/wedding going to cost, or how much debt are you looking to consolidate into the new loan?
- Are you looking for a loan to pay the full amount, or will you use your savings to pay part of it?
- How much can you afford to borrow and pay back safely? (More on that next)
Once you’re clear on your goals, it’s time to do some calculations.
2. Calculate how much you can borrow safely Show content
Before you look at specific types of loans and start the application process, you should have a clear idea of how much you can afford to borrow safely.
You can do this by using a calculator that allows you to input your income (salary is usually the main one here) and your regular outgoings and expenses (rent/home loan repayments, bills, general living expenses, childcare etc).
It’s important to be as accurate and thorough as possible when inputting these details so you get a realistic estimate on how much you could borrow. You’ll eventually need to provide these details as part of your loan application, and potentially provide documents to support them. If you’re not able to provide these documents, your loan may not be approved.
Based on the estimated amount you might be able to borrow, you would then also be able to calculate how much your weekly/fortnightly/monthly repayments would be and how much interest you would pay. This will give you another good indication of whether the loan amount is suitable.
3. Decide on the loan that’s right for you Show content
There are a number of different types of personal loans to choose from. The main choices you’ll have will be between:
Deciding on the right type of personal loan will depend on things like the purpose of the loan, how much you want to borrow (some loans have a minimum/maximum amount), and whether you want the flexibility of a variable rate or the peace of mind of a fixed rate.
It’s a good idea to speak to a lending specialist if you’re unsure of what the best option might be.
4. Submit an application Show content
How you submit your personal loan application will vary from lender to lender.
With CUA you can apply:
- Via your CUA Personal Banker on our iM CUA app
- Over the phone (133 282)
- In person at your nearest branch
Before you start, it’s a good idea to have all the information you need to hand so you can complete the application in one go without having to update it with extra details at a later date.
Each time you submit a loan application, it’s added to your credit record, so it’s important to get it right first time around. It’s worth remembering too that to complete the application you need to consent to having a credit check carried out.
For the application form you’ll need to provide information, including:
- Personal details of each applicant (name, date of birth, address, contact details etc).
- Number of dependants each applicant has (a dependant is anyone who is supported by you financially, whether they live with you or elsewhere).
- Proof of identification (driver's licence or passport, or a combination of birth certificate and Medicare card).
- Employment details (current and potentially past employment).
- Details of all your income e.g. salary, investment income, rental income, child support you receive, superannuation/annuities income. Application forms will either ask you for ‘gross’ or ‘net’ income. Gross means your income before things like tax and superannuation payments are deducted. Net income is your take-home pay after deductions have been made.
- Details of your living expenses, e.g. rent, utility bills, groceries, fuel etc.
- Details of your other financial obligations like a home loan, other personal loans, credit card balances. Other types of credit arrangements you have like Afterpay, zipPay or VetPay should be listed too.
- A list of your assets. These are simply things that you own, like a property, home contents, cars, investments, or savings and superannuation you’ve built up.
It’s really important that you include as much detail as possible with your application. Doing that will mean the lender can make a realistic assessment about how much you can afford to borrow safely so your repayments are manageable.
Once your application has been submitted, it will be assessed against the lender's criteria and you’ll be informed if your application has been successful or not.
5. Provide documents to support your application Show content
If you’ve been given conditional approval, you’ll be asked to provide documentation to support the application. The lender will specify which documents you’ll need to provide and how recent they need to be.
The documents you’ll be asked for could include:
- Proof of income such as the most recent pay slips, employment contracts, rental property statements, child support agreements, government benefit statements, etc.
- Proof of other financial expenses and general living expenses such as your most recent transaction account statement or loan account statements.
If you’re making a joint application, you’ll need to provide documentation for each applicant.
6. If approved, the loan will be funded and your repayments begin Show content
If your application and supporting documents meet the lender’s criteria, the loan will be approved.
At this point the lender will provide you with a loan contract confirming the loan details and any other terms and conditions.
Once you accept the contract, your loan will be ‘funded’, and it typically takes at least one business day for the funds to be received. How the funds are delivered by the lender will depend on the type of loan. For example, the money could be transferred electronically to your transaction account, paid via BPay, or issued as a cheque. Any details specific to your type of loan will be explained in your contract.
You can check with the lender when your first loan payment is required, and from then on how often they need to be made – weekly/fortnightly/monthly. Many personal loans will also allow you to make extra repayments if you have some spare cash, but make sure you check whether there is charge for making extra payments or paying off the loan early.
Once you’ve done your research, chosen a suitable loan, completed the application with supporting documents, and had it approved, all that’s left to do then is to use your loan to do the things that matter to you.
Ready to get started with an application?
Important information: Please note that this is only intended as a general guide in relation to issues you may want to consider when applying for a personal loan. It is not intended to be an exhaustive list of all relevant issues and you should take into account your own particular circumstances, and obtain independent expert advice where needed, before proceeding.