What to Do Before Applying for a Loan

Nov 25, 2022

Applying for a loan can be a stressful and even confusing process. Here are a few things you can do before making your application to have everything run smoothly and increase your chances of being accepted.

Make Sure You Meet the Criteria

Before applying for a loan, you should check whether you are eligible to begin with. No point in doing all the work to put your application together if its going straight in the bin.

Each institution may have its own rules, as will each type of loan. You should talk to your broker about the requirements of your particular loan and look for anything that might disqualify you.

A few that are most common across the board are that the application must:

Be at least 18 years old,
Be an Australian citizen or have the relevant visa,
Be employed and meet the minimum income requirements,
Not be currently bankrupt,
Have a good credit rating.

Know Your Credit History and Maintain a Good Rating

One of the most important things that will contribute to your success in getting a loan is your credit rating. A credit rating informs the lender how reliable you have been in the past for making your repayments. Every time you make a payment on time, whether that's for a loan or simply for your bills, your credit rating can improve. On the other hand, late or missed payments will negatively impact your credit rating.

Before applying for a loan, go over your credit history so you can explain any faults in it to your lender. You can easily get your credit rating through many online sites such as; Equifax, Experian or Illion.

Have Your Financial Statements Ready and Up to Date

Your lender is going to need to see your most recent tax return and tax assessment notice. Other documents such as payslips, bank statements and group certificates will likely also be needed.

Depending on the lender, different documents may be needed, so, before applying, ask the lender for a full list of what's needed so as not to slow the process when you realise you don't have what you need down the road.

Go Over Your Mortgage and Credit Card Statements

Your lender is going to need to see your most recent tax return and tax assessment notice. Other documents such as payslips, bank statements and group certificates will likely also be needed.

Make Sure You Understand the Associated Fees

A very common mistake made by first-time borrowers is applying for a loan without realising there are a number of fees they will have to pay.

We highly recommend asking your lender for a ‘funds-to-complete’ calculation so you are not blindsided by a bunch of payments.

Are you in need of a loan? Talk to a business finance broker who can run you through all the ins and outs.

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