What personal loan options do I have as an apprentice?
If you're an Australian apprentice and you need a loan you have 2 very different options:
- Take out a personal loan.
- Get a Trade Support Loan (TSL) from the government.
TSLs have some obvious advantages: you receive a monthly payment and you won't get charged interest. You don't have to pay the loan back until you start earning above the income threshold (although your debt is adjusted for inflation each year).
But you might not meet the eligibility requirements, or need a larger lump sum. In this case you could look at a personal loan. You'll be charged interest and fees and you'll have to start repaying the loan right away.
Can I take out a loan as an apprentice?
Apprentices can take out loans to cover almost anything, from training costs or work equipment to daily living expenses.
It can be hard to get a personal loan approved as an apprentice because your income is likely low, especially during the early years of your training. And you may not have an established credit history yet.
If you want a TSL you'll need to be studying a Certificate II, III or IV level qualification in an eligible subject.
How do Trade Support Loans work?
Apprentices can borrow up to $24,492 in total with a TSL over the 4 years of an apprenticeship. Eligible apprentices receive a monthly payment, with payments being higher in the first year and shrinking each year as your wages rise.
Monthly TSL payment schedule (2023–24)
To qualify for a TSL you need to be:
- Undertaking a qualifying apprenticeship.
- An Australian resident with a tax file number.
A qualifying apprenticeship means you're undertaking one of the following qualifications:
- A Certificate III or IV in an occupation on the Trade Support Loans Priority list.
- A Certificate II, III or IV in an agricultural qualification on the Trade Support Loans Priority list.
- A Certificate II, III or IV in a horticulture qualification on the Trade Support Loans Priority list in specified rural or regional area.
Repaying your Trade Support Loan
Much like a university HECS-HELP loan, apprentices don't have to repay their TSL debt until they earn above the minimum income threshold. The threshold for 2023–24 is $51,550 a year.
Once you start earning this much you will have compulsory repayments taken from your monthly earnings.
TSL debts are interest-free but are indexed once a year according to the CPI. This means your debt will rise in line with inflation.
How do personal loans for apprentices work?
An apprentice can apply for a personal loan just like any other borrower. You could take out a personal loan to cover tools or equipment, or get a car loan to buy a vehicle so you can get to your job.
Personal loans: The basics
With any personal loan you borrow a sum of money and then pay it back over time. You repay the debt monthly, weekly or fortnightly and your lender charges you interest. You may also have to pay an upfront loan fee and a monthly account fee.
The amount you can borrow depends on:
- Your age. You generally need to be 18 to get a personal loan. If you're an apprentice under 18 you won't be able to get a loan approved (but you might still be able to get a TSL).
- Your income. Lenders assess your borrowing capacity based on your income. Since apprentices earn less than most workers, especially early on, it will be hard to qualify for a large loan.
- Your credit score. Having a good or excellent credit score helps you get a loan application approved and can unlock lower interest rates. You can check your credit score for free with Finder.
- Your saving and spending habits. If you've saved a bit of money and spend less than you earn, you look like a more reliable borrower in a lender's eyes.
Should I take out an apprentice loan or a Trade Support Loan?
Deciding between a personal loan and a TSL depends on your circumstances and financial needs. We've broken down the pros and cons of both to help you decide.
- No interest charges. There is no interest on TSL payments, so your unpaid debt won't increase as fast as a personal loan debt.
- No loan fees. You don't pay any fees to a lender.
- Monthly payments. With this program you receive a monthly payment rather than a single sum, which means you don't have to worry about spending it all early in your apprenticeship.
- Completion discount. You receive a 20% discount on your total TSL debt if you successfully complete your apprenticeship.
- Strict eligibility criteria. You'll need to meet all the eligibility criteria to get a TSL.
- Parental approval. You need parental approval if you're under 18.
- Your debt is indexed annually. While you're not charged interest, once a year your outstanding TSL debt will be adjusted for inflation. In times of high inflation this can add to your debt.
- Open to any borrower. With a personal loan your training and employment situation is not subject to the TSL eligibility criteria.
- Flexible borrowing arrangements. TSL payments are fixed, but personal loans are flexible products. You can choose the amount you want to borrow and the loan repayment terms. And you can get the money in a single lump sum.
- Interest charges. Your lender will charge you interest on top of the loan. You have to pay back the loan amount plus interest charges.
- Loan fees. Lenders charge fees on personal loans, such as an upfront application fee and a monthly fee.
- Apprentices may struggle to get a loan approved. If your income is low and you don't have a strong credit history then you might not qualify for a personal loan.
- Not available to borrowers under 18. Australian lenders won't lend to borrowers under 18 years of age.
Others forms of government financial support for apprentices
Living Away From Home Allowance
Australian apprentices who are required to move away from their family home for the first time can receive a Living Away From Home Allowance.
Eligible apprentices receive a weekly payment for up to 3 years, with the payment amount declining each year.
Australian Apprentice Training Support Payment
Eligible Australian apprentices can get up to $5,000 of financial assistance, paid out in 6-month instalments over 2 years. Payments are designed to help apprentices cover their living expenses.
To qualify for Australian Apprentice Training Support Payments you need to be studying a Certificate III level qualification or above in an occupation listed on the Australian Apprenticeships Priority List.
This payment is considered part of your taxable income.
Youth Allowance, Austudy and ABSTUDY
- Youth Allowance. Apprentices aged between 16 and 24 may be eligible for Youth Allowance. Income and asset tests determine your eligibility.
- Austudy. Apprentices aged 25 and over may be eligible for Austudy. Income and asset tests determine your eligibility.
- ABSTUDY. ABSTUDY is also available for apprentices of any age who are Indigenous Australians. The amount that you're eligible for may vary.
How do I compare personal loans for apprentices?
Lenders don't offer specific personal loans for apprentices. Instead you simply apply for a personal loan that looks suitable and the lender looks at your income, spending and credit score when assessing your application.
If you've decided to get a personal loan rather than a TSL, for whatever reason, it's important to compare loans from a range of lenders.
Here are some tips:
- Pay attention to the interest rate. The lower your interest rate, the lower your interest charges are. It's the most important factor when comparing personal loans.
- Watch out for loan fees. Some personal loans come with hefty fees, especially if the lender charges the application fee as a percentage of the total loan amount. Make sure you add up the monthly fees as well.
- Check your credit score before you apply. You can check your credit score for free and see if there are any obvious issues dragging your credit score down. This could be an unpaid debt or a mistake on your file, which you can get fixed.
- Check the eligibility criteria before you apply. Don't waste time applying for a loan if you don't meet the eligibility criteria first. A rejected application also hurts your credit score.
Frequently asked questions
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We are independently owned and have a mission to help Australians make better financial decisions. That means our opinions are our own and you can compare nearly every personal loan in Australia (and find a better deal).
Since 2014, we've helped 300,000+ people find a personal loan by explaining your options simply. You don't need to give us any details to use our comparison. We're here to help you make a decision.
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