Can temporary residents get a personal loan?

A personal loan can often come in handy when you’re a little strapped for cash, particularly when you’ve been hit with unexpected expenses such as medical bills, emergency travel costs or even a reduction to your regular income. Many of these sorts of unforeseen outgoings also affect temporary residents, so you might be wondering whether those living in Australia on a visa are eligible for personal loans.

While the lending criteria might be more stringent, there are still a number of banks and lenders that would consider a personal loan application from certain temporary residents.

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12.69%

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13.56%

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$1006

36 months

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2.98

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10.50%

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11.38%

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$975

36 months

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3.24

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12.69%

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13.56%

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$1006

36 months

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3.06

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13.86%

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$1011

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3.01

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Learn more about personal loans

Why is it more difficult for a temporary resident to get a personal loan?

One of the biggest reasons visa holders might find it more difficult to get a personal loan than permanent residents or Australian citizens is because banks and lenders will generally see them as more of a risk. Much of this perceived risk comes from the uncertainty of whether a temporary resident will be able to pay off their loan before their visa lapses.

Even if your loan term ends well before your visa’s expiry date, there is still a potential risk your visa could be cancelled for one reason or another. For example, if a temporary resident breaches their visa’s conditions, they could be sent home early. As unlikely as this may seem, banks and lenders take all of these scenarios into consideration when determining the level of risk you pose as a potential borrower.

Due to the fact that temporary residents can typically be seen as riskier borrowers, lenders may also require you to pay a higher interest rate on your loan. This is, however, dependent on your individual financial situation and can differ between lenders.

How do I apply for a personal loan as a temporary resident?

The personal loan application process is largely the same for temporary residents as it is for permanent residents and citizens, with a few key differences. Here are six steps to follow when applying for a personal loan as a temporary resident: 

  1. Consider your credit history: Unless you have already been approved for a loan or other finance during your time in Australia, you won’t have an Australian credit score. Lenders also won’t be able to access any international credit history. This means it can be difficult to prove whether your past credit behaviours have been positive. You may alternatively be assessed on your current financial situation, visa history, value of assets and other factors, so it’s worth being prepared with any documentation that may assist with this process.
  2. Assess your budget: Using a personal loan calculator to get an estimate of the total cost of a potential loan, and what your repayments might be, could help you make a more informed decision. You may generally have a better chance of getting your loan approved if you apply for an amount that you can comfortably afford to make repayments on. It could also be a good idea to consider a loan term that ends well before your visa’s expiry date, as long as it works with your budget.
  3. Search and compare personal loans: RateCity allows you to easily compare a wide range of personal loan options so you can find one that best suits your individual needs.
  4. Check the lending criteria: Once you have compiled a shortlist of potential personal loans, check to see whether you meet all of the eligibility requirements, particularly those that are specific to temporary residents. Keep in mind that these can differ from one loan to the next. Consider reaching out to the lender if you have any questions, prior to submitting your application.
  5. Prepare your application: If you’re comparing personal loans on RateCity, you can click straight through to the lender’s website where you can conveniently apply online for your preferred loan.
  6. Wait for a decision: Once you submit your application and the documentation required, it’s just a matter of waiting to hear if you have been approved.

What are the pros and cons to consider?

As with any financial decision, it’s worth considering both the benefits and disadvantages involved when it comes to applying for a personal loan as a temporary resident.

Pros:

  • Access to cash: If you are approved for a personal loan, you’ll have access money when you need it most, potentially making challenging or unexpected financial situations more manageable.
  • No bad credit history: Since international credit scores are not taken into consideration, any bad credit history won’t affect your application.
  • Competitive finance: Doing your research and comparing your options can assist you with finding the most competitive loans that may be available to you.

Cons:

  • Higher rates: Temporary residents may be faced with higher interest rates as lenders generally consider them to be riskier borrowers.
  • No good credit history: Again, international credit scores are not taken into consideration, which also means any good credit history won’t be able to assist with your application.
  • Strict lending criteria: Tougher eligibility criteria can sometimes mean you might have to earn a higher income or have bigger assets than other borrowers.

Frequently asked questions

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 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.

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.

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.

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.

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.

Can I get a bad credit personal loan with a guarantor?

Some lenders will consider personal loan applications from a borrower with bad credit if the borrower has a family member with good credit willing to guarantee the loan (a guarantor).

If the borrower fails to pay back their personal loan, it will be their guarantor’s responsibility to cover the repayments.

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 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.

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.

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 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.

Can students with no credit history get loans?

It is possible for students with no available history of borrowing or managing money to get a personal loan, though it may be more difficult as well as expensive than for borrowers with a good credit history.

Having no credit history means having no credit score. While many lenders may consider having no credit score to be better than having a bad credit score, they may still consider it riskier to lend to an unknown borrower and may charge higher interest rates or fees than to borrowers with good credit scores.

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.

Can I get a $4000 personal loan if I’m unemployed or on Centrelink?

Before most providers of personal loans or medium amount loans will approve an application, they’ll want to know you can afford the loan’s repayments on your current income without ending up in financial stress. Several lenders don’t count Centrelink benefits when assessing a borrower’s income for this purpose, so these borrowers may find it more difficult to be approved for a loan.

If you’re unemployed, self-employed, or if more than 50% of your income come from Centrelink, consider contacting a potential lender before applying to find out whether they accept borrowers on Centrelink.

What is an unsecured bad credit personal loan?

A bad credit personal loan is ‘unsecured’ when the borrower doesn’t offer up an asset, such as a car or jewellery, as collateral or security. Lenders generally charge higher interest rates on unsecured loans than secured loans.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

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.

Which lenders offer bad credit personal loans?

Several dozen lenders offer bad credit personal loans in Australia. These are generally smaller lenders that aren’t household names.

How do I consolidate my debt if I have bad credit?

The worse your credit history, the harder you will find it to consolidate your debts, because lenders will be less willing to lend you money and will charge you higher interest rates.

However, people with bad credit histories can make debt consolidation work by following this three-step process:

  1. First, find a lender willing to give you a bad credit personal loan. This process will be simplified if you go through a finance broker or use a comparison website like RateCity.
  2. Second, make sure the interest repayments on your new loan are less than the repayments on the loans being replaced.
  3. Third, instead of spending those savings, use them to pay off the new loan.