Having a bad credit history can make applying for finance more difficult. However, there are a number of lenders on the market who make exceptions for, or cater loans specifically towards bad credit borrowers. As long as applicants can show proof of a regular income and an ability to manage repayments, they may still qualify for finance.
Prospective applicants should be aware that having a bad credit history usually means expecting to pay more for finance than individuals with a good credit history. Bad credit borrowers may also be offered shorter loan terms, and therefore higher repayments than good credit borrowers. This is because they pose more of a risk to lenders.
If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call the Financial Counsellors hotline on 1800 007 007. It is open from 9:30am to 4pm, Monday to Friday. When comparing short term loans, ensure you take into consideration any fees, charges and rates you may be charged. It's important to weigh up all your options before applying for any form of credit.
⚠️ Warning about Borrowing
Do you really need a loan today?*
It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.
Check your options before you borrow:
For information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor
Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan
If you are on government benefits, ask if you can receive an advance from Centrelink: Phone: 13 17 94
The Government's MoneySmart website shows you how small amount loans work and suggests other options that may help you.
* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.
Eligibility criteria differs between lenders. As a general rule, to qualify for any sort of finance in Australia loan applicants must be:
Over the age of 18
An Australian citizen or permanent resident
While lenders generally prefer applicants with good credit and in full-time employment, applicants can still be eligible if they:
Have bad credit. Short-term lenders offer loans of up to $3,000 and most will accept applicants that have bad credit providing that they can show proof of income. This can include customers who are bankrupt in some cases.
Are on a low income. As long as someone has the means to repay the loan, they could be eligible for a loan. When someone applies, lenders will ask for their income and employment situation and will check the last 90 days of their bank statements.
Receive Centrelink payments. Many lenders accept those receiving Centrelink as income, even sometimes if that is the only income that they receive. Though usually lenders require that borrowers only attribute less than half of their income to Centrelink payments. There may be criteria that these applicants need to meet, such as 50% or more of their Centrelink payments not going towards their repayments.
Before clicking "Go to Site", find out more about various loan options.
Bad credit loans
For potential loan customers who have bad credit, they can consider applying for a $3,000 bad credit loan. Lenders who offer these loans may still look at an applicant's credit history, but focus instead on their current financial standing and their ability to repay the loan. These loans tend to attract higher than usual interest rates and fees. These fees are capped at a $400 establishment fee and an APR of 48%, but if offered these rates customers can expect high repayments and high loan costs.
Secured personal loans
A secured personal loan requires that the borrower provide some form of collateral, which could come in the form of equity in their home, a term deposit, or a vehicle. Secured loans often have more competitive interest rates than unsecured loans, and for bad credit applicants, these types of loan may work out cheaper than an unsecured loan. Repayment terms can vary between one to seven years, and the interest rate can be variable or fixed.
Unsecured personal loans
If a prospective borrower can’t or doesn't want to provide any kind of security, they can consider applying for a variable rate or fixed rate unsecured personal loan. This type of loan will usually come with a higher rate, but may also require less paperwork than its secured counterpart. Applicants may also find fewer restrictions in the way they can use their loan funds.
Short term loans
While these loans are generally for $2,000 and less, there are lenders offering larger loans for up to $3,000. Also known as payday loans, these are unsecured personal loans that come with fixed fees and rates. They have relatively short repayment periods, generally ranging from 16 days to one or two years. Repayment times of these loans depend on when the approved applicant gets paid, and in most instances, they have to set up direct deposits so the amount is deducted on day of payment. Be aware that while fees and interest rates are capped for these small-medium loans, repayments are still usually very high.
How to compare loan options
How much will the loan cost?
Prospective applicants should check to see whether a loan's rate is fixed or variable, and look at the upfront and ongoing fees associated with the loan. If they are applying with a non-Authorised Deposit-taking Institution (ADI), such as a payday lender or an online loan provider, the lender will be restricted as to how much they can charge. For a loan up to $2,000, fees are capped at a 20% establishment fee and a 4% monthly fee. For loans between $2,001 and $5,000, charges are capped at a $400 establishment fee and a 48% p.a. interest charge which includes all other fees and rates.
Does the loan include flexible repayment options?
Can customers make extra payments or repay the entire amount ahead of time without attracting any penalties? Do approved applicants get to choose between making weekly, fortnightly, and monthly repayments? Do they have to set up direct debits or do you have other options when it comes to repayment methods? These are all good questions to ask to see how flexible repayment options are with a loan.
How long do you have to repay?
Repayment terms differ between lenders but customers will usually have between 60 days and one year to repay their loan. Applicants should choose repayment terms that meet their needs and budget. Be aware that longer repayment terms will end up costing more over the life of the loan, but shorter terms will mean higher repayments.
What kind of account access is available?
Some lenders offer mobile, online and phone banking options with their loans, so that customers can keep track of their repayments and manage their accounts more easily.
Tips for being approved
There are no set parameters that can guarantee the approval of any given $3,000 loan application, but prospective applicants can take certain measures to increase the likelihood of their application being approved.
Go through the eligibility criteria. Customers can check the eligibility criteria for $3,000 loans on finder.com.au review pages. Applicants should check that they meet the minimum income, employment and credit history requirements before applying.
Examine your credit file. While potential loan applicants might think they know what’s on their credit file, there's always room for mistakes. Errors can creep into a person's file and it’s only when they examine it can they spot them. If and when you spot any errors, you can take measures to fix them. Getting a free copy of your credit file is easy, and you can get it online.
Don’t apply indiscriminately. Loan applications show on your credit file and too many applications is usually a red flag to lenders. When people apply for multiple loans in quick succession, a prospective lender can view this as irresponsible borrowing behaviour and it can also negatively impact their credit score. To keep the possibility of approval more likely, limiting the number of loan applications and the frequency at which you apply for loans is important.
Making on-time repayments. Lenders try to establish if their customers can manage their repayments through the entire course of the loan, but they don’t have any foolproof way of doing this. So, it is up to the customer as well to ensure that they can meet their repayments comfortably. Using a loan repayment calculator can tell you what to expect in the form of repayments. A calculator will require you to enter the loan amount, loan term, and interest rate. Customers can also choose between weekly, fortnightly, and monthly repayments
Weigh up the pros and cons of $3,000 loans
Repayment flexibility A number of lenders allow their customers to make repayments according to how frequently they get paid, which can be once a month, twice a month, or even four times a month. Loans that offer penalty free extra or early repayments can also save potential borrowers money on interest over the life of the loan.
Account access Most lenders give customers the ability to access their account online, and almost all offer access to phone banking as well.
Apply with bad credit Suffering from poor credit doesn't mean someone can’t get a loan. Most payday lenders will consider bad credit borrowers for a loan with less-than-perfect credit. Some lenders also do not perform credit checks, but as it is a requirement that all bad credit lenders lend responsibly, it shouldn't be of consequence whether or not a bad credit lender performs a check.
Higher interest rates and fees than standard loans Interest rates for bad credit loans are noticeably higher than most other loan types, so applying for such a loan should ideally be a last resort. If prospective applicants have time to wait and improve their credit score prior to applying, this will usually qualify them for a better loan deal. Payday loans or cash advance loans also tend to attract higher interest rates than more traditional secured and unsecured personal loans.
Higher repayments on the loan principal If someone is offered a higher than average loan rate and their lender has offered them a shorter term, they can expect their repayments to be high as well. Applicants should make sure these repayments will be manageable on their budget.
Less than reputable lenders If any offering seems too good to be true, it probably is. Applicants should ensure the lender they're applying with has a solid reputation by reading independent reviews and even customer experiences.
What to avoid
Applying for a $3,000 can involve certain risks, so it's crucial that to avoid the following:
People should avoid applying for more credit if they have trouble dealing with their existing loans or everyday expenses, because doing so can change their situation for the worse.
A typical bad credit loan comes with shorter repayment terms, which can require customers to make considerably high repayments. They should avoid getting into a situation where they cannot make timely repayments. Each individual financial situation should be taken into account before applying.
Prospective applicants should avoid paying unnecessarily high rates and compare their options to get the right and most affordable loan for them.
Frequently asked questions
If you still have questions about $3,000 loans, see if you can find the answer below. You can also use the form at the end of the page to submit a question to our team.
How do I begin the application process?
The first step is to compare your options, and after you find a loan you wish to learn more about or apply for, click on the "Go to Site" button. Once on the lender’s website you can begin the application process.
What happens after I apply?
Some lenders inform you of their decision in minutes, while other can take up to two business days. Expect to hear from the lender about its decision irrespective of whether it grants the loan to you or not.
Can I be approved for a loan if I receive Centrelink payments?
Bria is a writer for Finder, with a specialist knowledge of personal loans, car loans and business loans. Originally from the UK, Bria has been a professional personal finance writer in Australia for over 2 years. She has an M.A and B.A in Philosophy and Literature from the University of Sussex, and previously worked on the UK’s leading hospitality publication.
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