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Dealing with your debts with a personal loan
Consolidating debt using a personal loan or “debt consolidation loan” can be an effective way to deal with debt. This being said there are many pros and cons that you should consider before taking the steps to apply for a personal loan. You should consider whether a loan will provide a benefit, not only from a convenience point of view but a financial point of view.
Checklist before applying for a personal loan
Can I afford the personal loan?
- First, you should calculate whether you can afford the loan without too much change to your current lifestyle. You should compare what you are presently paying in total under your existing debt repayment commitments with what you would be required to pay under one large loan.
- The internet has numerous debt repayment calculators to help with this comparison analysis and Debt Fix hosts a range of calculators also that you can use for this purpose. Before using these calculators and comparison tools, please keep in mind that they should be considered as a guide only and interest rates and conditions may vary. If you are unsure, speak to a debt specialist by calling us on 1300 332 834.
Personal loan interest rates: Fixed or Variable?
- Once you have decided that a personal loan is the way to go, you need to think about whether you want a fixed interest rate or variable. Each has their pros and cons depending on your needs and comfort level but in deciding which way you want to go you need to ask yourself which provides you the best level of comfort in the event your situation changes.
- Speaking of unexpected changes, it may be wise to consider insurance in the event that your situation unexpectedly changes (for example, unemployment or an accident) in order to cover your loan repayments when your income is adversely affected.
How do I get a personal loan?
Thanks to the internet, applying for a loan couldn’t be simpler and gone are the days when you would need to fill out a form and make an application at the bank with a loans assessor. Of course, loan applications are still scrutinised carefully by banks and finance companies, especially in light of the GFC and the impact it had economically and socially.
Lenders must behave responsibly and exercise diligence when assessing loan applications, making sure that applicants can reasonably afford to meet their repayments and the loans are suitable for the purpose.
3 Easy Steps to Get a Personal Loan
4 Golden Rules to Get Approved for a Personal Loan
So how do you improve your chances of getting a loan? There are four golden rules to follow if you have any chance of getting a loan.
1. Check Your Eligibility
- You must be at least 18 years old and have a good credit rating.
- You must live in Australia or be a permanent resident.
- You must not have been bankrupt in the past and have the minimum amount of income required by the lender to demonstrate that you can afford the repayments.
- If you gamble regularly, it’s likely that a loan application will be rejected and if gambling is a problem for you, you should seek counselling.
2. Check Your Affordability
- A loan application will only be approved if you can demonstrate that it’s affordable. Once again, you may consider using a free Debt Fix borrowing calculator to test your affordability.
3. Apply Through A Specialist
- Apply through a bank or finance company who knows you the best. It makes sense that if your wages are paid to a particular bank, then that bank would have a fair idea about your income and spending habits. This being the case they would be in a pretty good position to assess your credit worthiness.
4. Check Your Credit History
- The key to any successful loan application is whether or not you have a good credit reputation. There is no better predictor of your future financial behaviour than you past financial behaviour and therefore a good credit reputation is a crucial component for a lender to consider whether or not to provide finance. If you live from pay to pay, if you consistently pay your bills late or you constantly overdraw your account then these are all signals that indicate to a bank or finance company that there is an increased risk that you will struggle to meet your loan commitments.
- On the other hand, if you have savings, if you pay your bills on time and you have a good credit history and if your credit cards are below their credit limits, a finance provider may see these as positive signs that you can afford a loan.
- It’s all about being financially responsible and both the consumer and the lender have a role to play. Contact Debt Fix on 1300 332 834 to see what options are available for your debt free future.
Call us now on 1300 332 834 for an obligation free, personal loan analysis
Don't visit a bank 2 or 3 times and make appointments with bank managers.
Through Debt Fix, you have access to banking systems so you will get the best unsecured personal loan. Whether you're looking to renovate or just looking for help with debt consolidation, we can help.
Personal Loans FAQs
Q: How long does it take?
A: Once you supply all the necessary documentation and sign the final loan documents, the loan can take as little as 24 - 48 hours.
Q: What is the min and max loan term?
A: The minimum loan term is 1 year to a max of 7 years
Q: What is the loan dependant on?
A: Loans are unsecured so a good credit reputation is key. If you have a clear credit file, (no defaults / bankruptcies etc) and can prove you can pay the loan back in full, without financial hardship, you have every chance of a successful loan application.
Benefits and Consequences of Personal Loans
Personal loans can be a great way to achieve a personal goal quickly. No matter if it’s a new car, holiday, a new business venture or debt consolidation, a personal loan could make it happen. Like anything though there are benefits and consequences that need to be considered before you make the decision to borrow money and there are some common sense tips too that should be considered.
When you apply for a personal loan with bad credit, no matter whether it’s for debt consolidation or any other worthwhile purpose, the key thing to remember is to do your research. Visit comparison sites and use loan calculators and investigate your options, making sure that the financial product is right for you.
Benefits of Personal Loans
- The biggest benefit when it comes to getting a personal loan is that you get to realise your ambition quickly. Once the loan is approved and the money is in your account, it’s yours to do with what you want.
- Secondly, if its debt consolidation you are using the loan for, it’s extremely convenient to have multiple debts under the one payment, after all its easier to manage just one debt as opposed to multiple credit facilities.
- Personal loans generally have a finite term which means that you will know when the loans end date is, unlike a credit card that has a perpetual life.
- Generally speaking, personal loans can (in some cases) offer a cheaper interest rate than a credit card. As with anything there are exceptions to this rule and interest rates charged depend on your borrowing risk, the lender and your credit reputation.
Consequences of Personal Loans
Like any option that presents a benefit, there are always consequences to consider and these tend to counter any positives. Whether or a not a personal loan is the “right choice” depends on whether the benefits outweigh the consequences so it’s important to weigh up these options before any decision to take a loan is made.
- Consolidating debts under one payment must provide for a financial benefit, that is, you need to ensure when you swap bad debt for different bad debt that you actually save money per month otherwise it could be a case of going from the frypan into the fryer.
- Before you get a personal loan you must review your budget and test whether the repayments are affordable / manageable. Whilst the lender has a responsibility to do this also, no one knows your budget better than you. When you are considering the affordability, it’s a good idea to consider whether or not you income will change that is, in the event your income unexpectedly drops, you should ask yourself whether you will be able to maintain the normal payments.
- If you are intending the loan for debt consolidation, you must consider closing those credit cards / credit lines unless you run the risk of racking those credit cards up again and becoming further indebted.
Debt consolidation, Bringing debts together into one cheaper payment
So, you’ve made the decision that a loan is the answer to your debt problems and you want to combine all your small debts into one, cheaper loan. As stated before a consolidation loan can be an effective tool to address your debt situation but in saying this you must take care and seriously consider all the benefits and consequences before you do anything.
Call Debt Fix on 1300 332 834 and speak with an expert and ask questions about whether you will be better off after you have consolidated your debt. If you are not going to be better off, you need to really think long and hard why you would swap bad debt for different bad debt and of course it goes without saying that you should cancel all those credit facilities which have been consolidated unless of course, you want to risk finding yourself with twice as much debt than when you started.
- Click here to find out more about debt consolidation.
- Receive a free personal debt analysis valued at $300.
- Contact Debt Fix, your debt consolidation specialists and work towards your debt free future.
Personal Debt Survey
Whether it’s to lower your monthly payments, or needing a little extra for that next big purchase, Debt Fix has can get you the help you need.Start Now