What is a personal loan?

There can be certain occasions in life where, despite your best forward planning, unpredictable expenses arise and your finances fall short. Whether that might be unexpected medical bills, repairs to your home or the need for a new car, personal loans can often come in handy and sometimes potentially make more sense than other financial products such as a credit card.

If you use a personal loan to make a major purchase or payment, you may pay less interest than if you had used a credit card. Personal loans are also often considered more manageable than a credit card, as they are repaid in a series of scheduled payments over a pre-determined period of time.

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Learn more about personal loans

Can teachers apply for a personal loan?

Many Australian teachers in the workforce are employed on a casual basis for a number of different reasons. According to the Australian Institute for Teaching and School Leadership (AITSL), these include newly qualified graduates, international teachers new to Australia, those returning to the workforce, recently retired teachers and those who have chosen to work casually due to the lifestyle, flexibility or variety.

Plenty of casually employed teachers work close to full time hours, particularly those who are awaiting permanent employment opportunities. However, casual employment is still generally seen as unstable due to the lack of guaranteed working hours and entitlements.

While this means casual teachers can often experience more difficulty getting approved for a personal loan, there are still lenders that may consider personal loans for casual teachers who meet their eligibility criteria.

Specific eligibility criteria will differ lender to lender, but applicants could be required to meet the following: 

  • Be at least 18 years of age
  • Hold an Australian or New Zealand citizenship, Australian permanent residency, or an eligible visa
  • Earn a minimum annual income, specified by the lender
  • Possess a good credit rating
  • Have a minimum amount left over after regular expenses to service repayments

Since casual teachers generally won’t have a regular income, some lenders might use different methods to analyse your finances, including assessing your gross year to date (YTD) income to calculate an average salary per fortnight.

How much would teachers qualify for?

This would depend on how much you are earning on average per fortnight, among other things. Banks and lenders will calculate whether you are able to meet the repayments for the amount you apply for over the desired term. If you are unsuccessful with your application, it might be worth considering reducing the requested amount and/or lengthening the loan term in order to bring down the cost of your regular repayments in line with what is deemed manageable on your income.

It’s important to keep in mind that lodging multiple applications within a short period of time might affect your credit score, so it’s generally a good idea to wait before reapplying. Better yet, consider taking extra care when doing your calculations to minimise your risk of rejection. Some lenders have their own online borrowing calculators that may help.

What would the repayment schedule look like?

Your individual repayment schedule would depend on a number of things including the amount borrowed, length of the loan term and the interest rate. Check out RateCity’s Personal Loans Calculator to get an estimated repayment schedule.

What are some reasons teachers may want to take out a personal loan?

  • Unexpected bills such as medical or vet
  • To pay for a holiday
  • Consolidate debts
  • Furnish a home following an unexpected move
  • Home renovations or repairs
  • To buy a car
  • Assist with costs involved with planning a wedding

Can taking out a personal loan impact other forms of finance in my life?

As with any financial product that allows you to borrow money, you should carefully consider your ability to service the loan for the total length of its term. If you stay on top of your repayments and eventually pay off the loan in its entirety, your credit score could benefit, potentially meaning more competitive interest rates from certain credit lenders.

If, however, you fail to meet repayment deadlines and fall behind on your schedule, this could seriously impact your credit score in a negative way, which could make it more difficult or costly to borrow money down the track.

How to apply for a personal loan as a teacher

  1. Check your credit score: It’s pretty simple to do this online through a selection of providers, generally free of charge. You’ll just need some documentation to verify your identity, like your passport and driver’s license.
  2. Compare your options: It’s important to consider the features and benefits of each potential loan compared to interest rates and any fees that may apply.
  3. Ensure you meet the eligibility criteria: Once you have made a shortlist of your preferred personal loans, check to see whether you are eligible to apply.
  4. Reach out to the lender: Be careful to have all of your questions answered before you submit your application in order to minimise the risk of having it rejected, which could affect your credit rating.
  5. Complete your application: Generally, you will be able to submit your personal loan application online. Remember to have your personal details and documents handy for identification purposes.
  6. Await a decision: The amount of time your application could take to be approved varies. Check with the individual lender when applying.

It might be a good idea to consider your options further before applying for a loan, including weighing up the pros and cons of personal loans and learning more about personal loans for casual employees.

Frequently asked questions

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

How can I get a $3000 loan approved?

Responsible lenders don’t have guaranteed approval for personal loans and medium amount loans, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income. Centrelink payments may not count, so you should check with the lender prior to making an application.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

What do single parents need for a personal loan application?

Much like applying for other personal loans, applying for personal loans for single parents will likely require the following:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of assets (e.g. car, home)
  • Details of liabilities (e.g. credit cards, other loans)
  • Loan amount
  • Loan term

Can I get guaranteed approval for a bad credit personal loan?

Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application. 

It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit because there’s a higher likelihood that the personal loan will be repaid. 

So a borrower with good credit is more likely to have a loan approved and to be approved faster, while a borrower with bad credit is less likely to have a loan approved and, if they are approved, may be approved slower.

Can I get a no credit check personal loan?

Personal loans with no credit checks are available and called ‘payday loans’. These are sometimes used as short-term solutions for cash-strapped Australians. They often carry higher interest rates and fees than regular personal loans, and individuals risk putting themselves into a worsened cycle of debt.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Are there emergency loans with no credit checks?

While many personal loans require a credit check as part of the application process, some personal loans and payday loans have no credit checks, which may appeal to some borrowers with a bad credit score.

Keep in mind that even if a loan is available with no credit check, the lender will likely want to confirm that you can afford the repayments on your current income.

What are the pros and cons of bad credit personal loans?

In some instances, bad credit personal loans can help people with bad credit history to consolidate their debts, which can help make it easier for them to clear those debts. This is because the borrower might be able to consolidate several debts with higher interest rates (such as credit card loans) into one single debt with a lower interest rate and potentially fewer fees.

However, this strategy can backfire if the borrower spends the loaned funds instead of using it to repay the new loan. Another disadvantage of bad credit personal loans is that they have higher interest rates than regular personal loans.

What do credit scores have to do with personal loan interest rates?

There is a strong link between credit scores and personal loan interest rates because many lenders use credit scores to help decide what interest rates to offer to potential borrowers.

If you have a higher credit score, lenders will probably classify you as a lower-risk borrower. That means they’ll be keen to win your business, so they may offer you a lower interest rate if you apply for a personal loan.

If you have a lower credit score, lenders will probably classify you as a higher-risk borrower. That means they might be concerned about you defaulting on the loan and costing them money. As a result, they might protect themselves by charging you a higher interest rate.

Can unemployed single parents get personal loans?

It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments.

If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan options. Consider contacting the lender before applying.

What are the pros and cons of personal loans?

The advantages of personal loans are that they’re easier to obtain than mortgages and usually have lower interest rates than credit cards.

One disadvantage with personal loans is that you have to go through a formal application process, unlike when you borrow money on your credit card. Another disadvantage is that you’ll be charged a higher interest rate than if you borrowed the money as part of a mortgage.

How long does it take to get a student personal loan?

Completing an online personal loan application can often take anywhere from 10 minutes to 1 hour. Depending on your lender, processing your personal loan application may take anywhere between 1 and 24 hours. If your personal loan application is approved, you may receive the money in your bank account the following business day, or, in some cases, the same day.

Can I get a self-employed personal loan with bad credit?

It may be much more difficult for a self-employed borrower to successfully apply for a personal loan if they also have bad credit. Many lenders already consider self-employed borrowers to be riskier than those in full-time employment, so some self-employed personal loans require borrowers to have excellent credit.

If you’re a self-employed borrower with a bad credit history, there may still be personal loan options available to you, such as securing your personal loan against a vehicle of equity in a property, though your interest rates may be higher than those of other borrowers. Consider contacting a lender before applying to discuss your options.

What are the Westpac personal loan eligibility criteria?

The process to apply for a personal loan from Westpac is simple and can be done online. To be eligible for a Westpac Bank personal loan, you must meet the eligibility criteria. These include:

  • You should be over 18 years old
  • You must be a permanent resident or hold a valid visa with confirmed employment in Australia
  • You should earn a regular and permanent income of at least $35,000 before taxes

If you feel you meet these eligibility criteria, you can apply for a personal loan with Westpac. With your application form, you’ll also have to submit the following documents:

  • Personal details including name, contact information, and residential address 
  • Proof of identity such as drivers licence or passport details
  • If you’re self-employed, you’ll need a list of assets, savings, investments, and liabilities as well as your most recent tax return information
  • If you’re an employee you’ll need to submit information related to your employment and finances like bank statements and payslips

Westpac Australia personal loans are available for amounts from $4,000 up to $50,000 and loan terms of up to seven years.

What are the pros and cons of debt consolidation?

In some instances, debt consolidation can help borrowers reduce their repayments or simplify them. For example, someone might take out a $7,000 personal loan at an interest rate of 8 per cent so they can repay an existing $4,000 personal loan at 10 per cent and a $3,000 credit card loan at 20 per cent.

However, debt consolidation can backfire if the borrower spends the extra money instead of using it to repay the new loan.

How can I improve my credit rating/score?

Your credit score will improve if you demonstrate that you’ve become more credit-worthy. You can do that by minimising loan applications, clearing up defaults and paying bills on time.

Another tip is to get the one free credit report you’re entitled to each year – that way, you’ll be able to identify and fix any errors.

If you want to fix an error, the first thing you should do is speak with the credit reporting body, which may take care of the problem or contact credit providers on your behalf.

The next step would be to contact your credit provider. If that doesn’t work, you can refer the matter to the credit provider’s independent dispute resolution scheme, which would be the Australian Financial Complaints Authority (AFCA).

AFCA provides consumers and small businesses with fair, free and independent dispute resolution for financial complaints.

If that doesn’t work, your final options are to contact the Privacy Commissioner and then the Office of the Information Commissioner.