Guide To The Easiest Personal Loans To Get

A personal loan is a popular way to pay for purchases like a car, holiday or wedding. Personal loans are typically used to borrow an amount between $4,000 to $70,000 and come with a structured repayment schedule over a loan term of between one and seven years.

Personal loans in Australia are offered by:

• Major banks such as CommBank, ANZ, Bendigo Bank, and HSBC
• Credit unions and customer-owned banks like Heritage Bank and Credit Union SA
• Online non-bank lenders including Plenti, OurMoneyMarket and Liberty Financial

With everyday costs rising, increasingly people are turning to smaller, emergency cash loans from online services that are generally known as ‘payday’ loans.

Jake Osborne, Head of Australia at Lendela, a fintech platform matching borrowers with personalised loan options, said payday loans are generally short-term—meant to be paid back with the borrower’s next pay check—and come with very high interest rates.

“Because of the short repayment period and high costs, payday loans can quickly trap borrowers in a cycle of debt if they’re unable to repay on time,” he tells Forbes Advisor.

Osborne said that in addition to longer repayment periods and lower interest rates, personal loans are usually more flexible and transparent, which can help you manage your finances more predictably.

“Personal loans come with clearer terms, making them a safer option for borrowers seeking stability.”

The easiest personal loans to be approved for in Australia right now will depend largely on:

• Your credit history: Have you successfully applied for credit before and have a good track record of paying down your past debts?
• Your income: Do you earn enough to comfortably manage your living expenses as well as your loan repayments?
• Your banking activity: Osborne says lenders will factor in how you manage your income, expenses and liabilities and whether you engage in high-risk spending behaviour.

Ideally you’ll have a credit score in the mid-600s or higher. The poorer your credit score, the higher the interest rate you’ll likely be offered, by any lender. If you’re not sure what your credit score is, you can request a free report from a credit reporting body such as Equifax, Experian or Illion.

Another factor to consider in terms of getting approved quickly is ensuring you meet the lender’s criteria and have all of your identification and documents related to income, assets, expenses and debts ready to go, so you can complete your application in one sitting. If the lender needs to clarify any details, the process will likely be delayed. Some banks may require that you open an everyday account with them in order to take out a loan.

Below are five loans to consider, in alphabetical order, from a mix of online lenders and banks, for when you need a loan in a reasonable time-frame.

Note: The below list represents a selection of our top category picks, as chosen by Forbes Advisor Australia’s editors and journalists. The information provided is purely factual and is not intended to imply any recommendation, opinion, or advice about a financial product. Not every product or provider in the marketplace has been reviewed, and the list below is not intended to be exhaustive nor replace your own research or independent financial advice. For more information on how Forbes Advisor ranks and reviews products, including how we identified our top category picks, read the methodology selection below.

When you’re searching for easy loans to apply for it’s important to:

• Be certain you need the money. Going into debt now for an unnecessary expense could be a rash decision that comes back to bite you later.
• Be certain that a loan is the only way. For instance, could you be better off applying for a credit card with a lengthy interest-free period, or no interest like CommBank’s Neo?
• Consider other cashflow options. For instance, could you sell an asset? If you’re late to pay a hefty bill, you may be able to negotiate repayment terms directly with a provider.
• Take time to shop around. Don’t settle for the first or most convenient option. Consider lender marketplaces that generate personalised quotes from multiple lenders in one streamlined process.
• Don’t make multiple applications. Doing so means all of these applications are recorded on your credit report, and if you’re rejected it can lower your score.

Because parting you from your money is the main goal of scammers, it should come as no surprise that dodgy personal loans are one of their many tactics.

If you receive an unexpected email, text or message on social media about a low interest loan or loan approval — be extremely careful. Even if the message appears to be from your usual bank, be wary of clicking on any links or responding with any personal details. Verify for yourself by visiting the lender’s website or secure app—or even better phoning them directly.

Other warning signs to watch out for include:

• High, non-personalised interest rates that don’t account for your credit score.
• Lack of transparency around fees and excessive late-payment charges.
• Short loan terms that can place undue pressure on your budget.
• Low-doc loans that don’t take into account your financial situation.

Lendela’s Jake Osborne says it’s important to reduce interest by picking the right provider as well as a loan term that will lower your total repayment costs, without stretching your finances to the point where you can’t meet your repayment commitments.

“Additionally, if your income fluctuates or isn’t guaranteed long-term, it might make sense to opt for a slightly longer term with lower monthly payments to avoid overstretching yourself.”

He also suggests building up a financial buffer in a savings account to cover an extra monthly loan repayment, to avoid late fees if your income is disrupted. Choosing a loan with free extra repayments and early repayments is also wise.

“This allows you to take a longer term for safety but pay off the loan quicker when you’re financially able, reducing your interest costs over time,” he adds.

Osborne also encourages borrowers to consider all their available options because the speed and automation of online applications can be a bad thing for impulsive types.

“High cost credit facilities support a huge demand in Australia that I don’t believe is going to soften anytime soon.” he says.

“We would encourage borrowers to slow down and try to understand the difference between one credit provider and another.”

Rules set forth by ASIC require that for loans of $2,000 or less, the minimum term length is 16 days, with an establishment fee of no more than 20% of the loan amount and monthly fees of no more than 4% of the loan amount. The provider can’t collect more than 200% of the amount loaned if you miss a payment or fail to pay back the loan.

So for a typical payday lender, if you borrowed $2,000 and paid it off over 10 weeks, you’d owe:

• 20% of $2,000 as an establishment fee, which is $400
• 4% of $2,000 monthly fee, which is $80 X 3 months = $240
• For a total amount repayable of $2,640.

Fees for missing a payment vary by lender, but as an example, Nimble charges a $15 dishonour fee every time a payment is incomplete or late and a $5 fee for every day your account remains in default. If you were a week late, you’d add $50 to your debt.

If you need a small amount of money fast and don’t think you’ll qualify for an affordable personal loan, there are alternatives that are relatively easy to qualify for, depending on your circumstanced. These include:

• Applying for a no interest loan from Good Shepherd. You can be approved for up to $2,000 to cover buying a new appliance, furniture or digital device or to cover car repairs/rego or pay for medical or vet services. Housing-related expenses can be paid up to $3,000.
• Applying for an advance payment from Centrelink if you receive benefits or you’re eligible for Family Tax Benefit (FTB Part A). Someone on Jobseeker can get up to $500 in advance. If you’re on the age pension and single, you can get up to $1,628.25 within any six-month period.

The Australian Government’s MoneySmart website provides a list of resources you can turn to if you need urgent help with money.