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Questions to Ask Before Applying for a Personal Loan

Simplicity. It’s one of the main reasons why people are attracted to Personal Loans. The fact that you are able to get instant cash within minutes after you sign your contract, all without having to offer any collateral as security, makes a Personal Loan the go-to choice for many Australians. 

Before you apply for a Personal Loan, there are a couple of questions you should ask the lender so you know how the loan repayments work and in what time period. Below are some questions to get you started.

Q1. Is there a limit on the amount I can borrow?

Every lender has a different way of assessing your loan application. The amount of quick cash you can borrow depends on a number of factors, including your living expenses, income, credit score, how you will use the loan and liabilities, etc. It is recommended that you calculate your expenses and then apply for a loan amount based on that. The larger the sum you will borrow, the more difficult it will be for you to pay it off.

Q2. What’s the ideal credit score for applying for a Personal Loan in Australia?

A credit score is a numerical rating between 300 and 850 that represents your financial reputation as a borrower. Your credit score is one of the key factors that the lender will review before approving your loan. The higher the score, the more trustworthy you’ll appear to a bank or lender.

Most banks have a minimum credit requirement of a ‘good’ credit score. However, some lenders may be more lenient and will consider other factors such as income and employment history. Remember, each financial institution’s credit score tiers are unique – for example, with one lender you may be placed in the ‘very good’ bracket, while the same score elsewhere could rate you in the ‘average’ range. It is always best to do your research and check with each lender.

Q3. How much time will I have to repay the loan?

The repayment terms are set based on your capability of making weekly or fortnightly payments – the longer the repayment time, the more you will pay in interest rates.

Q4. Is the interest rate adjustable or fixed?

This is one of the biggest problems that most people face when taking out a Personal Loan. Read the fine print and then ask your lender about the terms of the interest rate. A variable-rate keeps changing, which is why many people avoid it. Alternatively, a fixed rate is consistent over the loan period. If you are opting for the variable interest rate, ensure you ask how much the interest rate will change and how often. Your credit score range will help you decide which interest rate option you should choose.

Q5. Is there an early repayment fee on the loan?

Some lenders charge you a fee if you repay the loan faster than the agreed-upon timeline. So, make sure to ask your lender about this and find out what the charge will be. To avoid this problem, set a monthly repayment amount that leaves you with enough cash to cover your needs. This way, you will save more and spend less.

These five questions should be the first step in finding out if a Personal Loan is the right financial solution for you. Looking for a Personal Loan? Visit Cashify to submit your online application now at cashifyloans.com/personal-loans 

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