Personal Loan FAQs
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CashPal TeamLast updated 13 December 2022
Applying for a personal loan: your questions answered
Online personal loans are becoming more and more popular. This guide answers the most common questions about applying for one — from eligibility and interest rates to fees, repayments and co-signers.
The basics
What is a personal loan?+
A loan offered by a bank or financial institution to an individual borrower — typically unsecured, meaning not backed by collateral like a car or home. They’re used for consolidating debt, large purchases, or unexpected expenses, with terms determined by your creditworthiness.
How do I apply for a personal loan online?+
Visit the lender’s website and complete the online application with basic personal and financial information — name, address, income, employment status, and details of your credit history and existing debts. If approved, you’re typically notified by email or phone and can complete the process online.
What information do I need to provide?+
Basic personal and financial details: name, address, date of birth, and income, plus your credit history and existing debts. Some lenders also require proof of income such as a recent payslip. Accuracy matters — this information determines your eligibility.
What are the eligibility requirements?+
Requirements vary by lender, but most require you to be at least 18, have a steady income and employment, and a good credit history. Some also set a minimum credit score or income level — check with the lender for specifics.
Can I apply if I have bad credit?+
Yes. Some lenders specialise in loans for people with poor credit, though they may charge a higher rate or require collateral. Research and compare your options carefully first.
What is the maximum amount I can borrow?+
It depends on the lender, the loan type, and your creditworthiness. Most personal loans range from $1,000 to $100,000. Your income, debts and credit history determine your personal ceiling — borrow only what you can realistically afford to repay.
Rates, fees and approval
How long does approval take?+
It varies by lender, but personal loan approvals can be quick — some lenders decide within minutes or hours. Once approved, funds may arrive within a few days.
How do I know if I’ve been approved?+
The lender notifies you by email or phone, usually with a written loan offer covering the rate, fees and repayment schedule. Review it carefully, sign the agreement if you accept, and the lender disburses the funds.
What is the interest rate on a personal loan?+
Rates vary widely by lender, loan type and creditworthiness — roughly 6% to 36%, with an average around 10%. Borrowers with good credit and a strong financial profile receive lower rates.
How is the interest rate determined?+
Lenders assess your credit history and score, income, debts and other financial information. Stronger profiles get lower rates — compare offers from multiple lenders before choosing.
What fees are associated with a personal loan?+
Common fees include origination fees (processing and underwriting), application fees, processing fees, and late payment fees. Review the fee schedule and consider whether they’re reasonable before applying.
Are there prepayment penalties?+
Some loans charge a fee for paying out early, compensating the lender for lost interest. Whether one applies depends on the lender and contract — review the agreement before accepting.
Repayments, security and co-signers
Can I use a personal loan for any purpose?+
Usually yes — debt consolidation, large purchases, unexpected expenses, or major life events. Some lenders restrict usage or ask for proof of the intended purpose, so check the agreement.
How do I make payments?+
Most personal loans require regular monthly payments covering principal and interest, per the schedule in your loan agreement. Most lenders accept payments online, by phone or mail, and many offer automatic payment options.
What happens if I can’t make a payment?+
Contact the lender as soon as possible — they may offer a payment plan or other options. Failing to pay as agreed can lead to collection action, extra fees, and damage to your credit score, so raise difficulties before missing payments.
Can I get a personal loan without a credit check?+
Typically no — most lenders require a credit check to assess creditworthiness. Some offer no-credit-check loans, but they usually carry higher rates and other disadvantages.
Are personal loans secured or unsecured?+
Most are unsecured, offered on your creditworthiness rather than collateral. Secured personal loans backed by a car or home may offer lower rates but carry the risk of losing the asset if you default.
Can I apply with a co-signer?+
Yes. A co-signer with strong credit can improve your approval chances and rate — but they become legally responsible if you can’t pay, so discuss the implications with them first.
Can I apply on behalf of someone else?+
Generally no — personal loans are offered to individual borrowers who must provide their own information. If you want to help someone, you may be able to act as their co-signer instead, with all the responsibilities that carries.
More questions?
If you still have questions about personal loans, check the Australian government’s MoneySmart website for independent guidance, or visit our FAQ page.
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