What Should You Know About Taking Out a Short-Term Personal Loan in Australia

Personal Loan

In recent years, personal loans taken by Australians have reached new heights. The country witnessed an increase in such loans by $30 billion between June to August 2019. According to recent data, around 8 million Aussies applied for personal loans during the same year, some being short-term personal loans.

If you are one such Aussie in need of immediate small amounts of cash, you should consult experts at a reputed digital bank offering short term personal loans Australia. They provide award-winning personal loans customized to your situation with no hidden fees. 

Here’s what you should know about taking out a short-term loan in Australia.

How Does a Short-term Personal Loan Work?

Short-term personal loans are relatively quicker to arrange compared to traditional options. You can have the amount credited to your account within a couple of hours once your application is approved.

Top short-term lenders in Australia request you to estimate your credit history as a guide to perform your personalised credit check required to approve your application. 

They typically determine your eligibility based on your current income and financial situation, thus ensuring higher chances of approval. They also offer a short repayment term, ranging anywhere between 6 months to a couple of years. 

The repayment time-frame is relatively short compared to a traditional personal loan which usually has one or more years.

Reasons to Take A Short-term Personal Loan

According to the Houzz & Home Australia Overview of Home Renovation, the average amount spent on home renovation projects in the country stabilised at $20k in 2019.

But, if you face an unforeseen financial roadblock, it can prevent you from proceeding with similar planned action items. In such circumstances, short-term personal loans in Australia can be of great help.

Reputed digital banks understand what matters to you most and help get you more of what you care about actually. Check if they offer quick personal loans, whether it’s for buying a new set of wheels, streamlining your debts, or covering your holiday expenses.

Unsecured Personal Loan as A Short-term Personal Loan Option

While Australia’s big four banks, NAB, ANZ, Commonwealth Bank, and Westpac, also provide personal loans, top licensed digital banks specifically offer unsecured personal loans.

An unsecured personal loan can be the ideal short-term personal loan solution when you need a loan for a short period. Not only do these loans come at a lower interest rate, but they also don’t require you to pledge anything as security or collateral for your loan.

This option allows you to borrow large sums of money, as high as $30000, and repay it over an extended period, usually somewhere between six months and two years. 

Eligibility Criteria for A Short-term Personal Loan Application

If you wish to apply for a short-term personal loan in Australia, you need to be a minimum of 18 years old. You may produce your driver’s licence or passport as your ID proof. More importantly, you have to be an Australian citizen to go through the application process.

Leading institutions require proof of your regular income, such as recent payslips. You will have to provide the 90 days of bank statements of your salary account as proof that you haven’t been bankrupt. 

Loan Amount You Should Take

But when you take out a short-term personal loan to purchase expensive items like cars, etc., make sure to understand what amount you can borrow to ensure you repay on time. 

Short-term lenders offer you personal loans depending on your financial situation. But you may check the loan amount range they offer, the fixed interest rates, and the repayment window. 

When you determine the loan amount with these aspects and your credit score in mind, your application is more likely to be approved quickly. Also, you will be able to pay off the loan with relative ease. 

Fixed Interest Rates

In 2013, the Australian government introduced stringent regulations around short-term personal loans, capping the interest rates at 4% a month. 

But reputed digital banks offer you such loans at much lower fixed interest rates, which won’t vary with the market fluctuations during the repayment term. Ensure they do not charge any establishment fee, thus making your total repayment amount equal to the sum of what you borrowed and the fixed interest.

Flexibility with Your Repayments

Currently, Australia has the 16th highest cost of living in the world. While some of its expenditure classes showed an increase in prices, others showed a downward trend in the past decade.

So, even if you live on a fixed budget in such an expensive country, the fluctuating expenses can compel you to change your short-term personal loan repayment schedules accordingly. You can make extra repayments or change your payback frequency, which can save you a considerable amount in interest.

Reputed short-term lenders offer personal loans that give flexibility with your repayments. Check if you get flexible repayment frequency, such as weekly, fortnightly, or monthly.

Fees Charged

Typically, Australian personal loan lenders will charge you for your short-term personal loan, which may include application fee, set up fee, annual fee, and late repayment fees. Some even charge you for paying off the personal loan before the schedule.

But top digital banks in Australia are transparent about their fees. They have no recurring or hidden charges. Confirm they include all the applicable fees in their unique personal loan offer to avoid any last-minute surprises.

Engage with A Reputed Digital Bank

When you engage with a short-term lender in Australia, ensure they offer you a state-of-the-art customer experience. 

The application process should be quick. The bank should be able to evaluate your application and disburse your loan within a matter of hours. Ensure the entire process is online, with automated income, expense, and credit scoring.

The top-ranking digital banks in Australia offer an excellent rate, personalised to your financial position, with an uncomplicated personal loan application process. Their team of experts should be approachable to discuss the right short-term personal loan solutions for you, with complete transparency.

A recent survey result suggests that one in five Aussies, about 23%, have or might take out a personal loan over the next six months, which could even be a short-term personal loan. If you also have plans to take a short-term personal loan, consult experts at a trusted digital bank to ensure your financial well-being.