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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.
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.
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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
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