There comes a time in everybody’s life when they need a bit of extra cash to make ends meet or for an emergency, regardless of how much they earn. And that is perfectly normal. A personal loan can be extremely handy in such situations.
Reputed financial institutions such as Alex Bank offer personal loans at reasonable rates. The process is quick, easy, and ensures customers are completely satisfied.
But before you apply for such a loan, there are a couple of critical things you must know.
What are personal loans for?
People take these kinds of loans from time to time for various reasons. Some do it for a medical emergency, while others have more pressing matters such as outstanding debts they need to pay off. In such cases, they apply for a debt consolidation loan that helps them repay some or all of their liabilities.
Other common reasons people apply for such loans include improvements or renovations to be done at their homes. For instance, people may need to fix or replace parts of their kitchen or other rooms.
Sometimes all people need are simple upgrades such as a better quality chimney, water heater, et. So, even if they aren’t short of funds, many would prefer to have an additional amount to fall back on.
Several folks use loans like these to go on vacations. It is a convenient way to travel without worrying about running out of cash in cases of unforeseen emergencies.
From the above, it is clear that personal loans are not only beneficial for multiple purposes, they also come in handy at any point of time in your life.
Unsurprisingly, an increasing number of people are considering and successfully applying for such financial relief. The proof is in the numbers. In fact, the global personal loans market is predicted to grow a whopping 31.7% by 2030.
Key factors when applying for a personal loan
Applying for a personal loan need not necessarily be a tedious or lengthy process. Knowing what you need beforehand, meeting the eligibility criteria, and other details can help make it that much easier.
You can begin by following the steps given below.
- Ensure you are eligible for it
It is essential to ensure you meet all the eligibility criteria before you get started. So, verify if you meet the following eligibility criteria:
- You are at least 18 years of age or older
- You are receiving a regular income
- You are an Australian citizen or permanent resident
- You haven’t filed for bankruptcy
- You can offer accessible details of your present financial situation
Once you are confident you meet all the above requirements, you can go ahead with your application. The chances of it being processed successfully will be higher this way.
- Review your financial situation
When you submit your loan application, banks will look into the details of your earnings, spending habits, and regular bills, among other things.
So, take an in-depth, careful look at your financial information, such as income and expenditure, to ensure you have a good account history. Showcasing this can be as simple as proving that you get your salary regularly, pay bills on time, and even have some amount of money to set aside as savings on a steady basis.
Furthermore, keep in mind that overdrawing your account may give the finance company the wrong impression about you. It might indicate that you are not capable of proper money management, casting a shadow on your loan application.
- Keep your paperwork up to date
It is wise to have all the essential documents in the correct order beforehand to save time and ensure a smooth application process.
Typically, you will need proof of income, bills with your address on them, bank statements showing your savings (if any), and rental agreements as part of address proof documents.
However, note that different institutions may have different requirements. So, contact the respective authority at the bank or other financial organisations for details in advance. Find out if they need any additional papers besides the mandatory ones to process the application.
- Apply for a reasonable amount
Financial institutions have seen their share of people trying to borrow amounts they cannot repay. Therefore, being honest on your personal loan application is the best way to move forward and increase your approval chances.
So, be sure to mention the reason you need that specific amount of money on your application. Showing the lenders your assets and other essential details can help your loan to come through successfully. Also, a repayment commitment indicates your clear intentions.
Often, it is advisable to borrow only the amount of money you actually need, even if you can afford a more significant amount. Ideally, anything between $2,000 and $30,000 is a good window. It will keep you from facing unexpected difficulty in repaying the loan amount and sliding into debt.
You can always take another loan if the need arises in the future. And the bank will be more than willing to lend you the money since your payback guarantee is solid.
- Check the interest rate and loan term
The interest rate is the fee that the financial institution charges you for the amount of personal loan you take from them. Generally, it is prudent to look for the lowest interest rate so that you can easily pay off the borrowed money rather than focus on the additional interest.
The length or term of your loan will determine the amount of interest you will have to pay. So, the longer the term, the lower the monthly payment you must make.
An ideal personal loan commonly ranges from six months to five years. You can decide the length of the loan depending on the amount you wish to borrow.
Finally, when you are ready to apply
Once you are familiar with the why and how of applying for a personal loan, the next step is to find a dependable bank or lending institution. It would help if you looked for one with a solid reputation, positive client reviews, excellent customer service, and no hidden costs.
Most importantly, look for institutions such as Alex Bank that offer a sensible interest rate, so you can save hundreds, perhaps even thousands of dollars in the long run. You can ask friends, colleagues, or family members for references as well.