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How to avoid your personal loan being rejected

What you need to do to get your personal loan application across the line

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Every rejected personal loan application is listed on your credit file. Receive just one rejection and the next lender may see this as a red flag, which may be enough to reject you again. Herein lies a big obstacle. That's why it's important to learn how to avoid personal loan rejection as best you can.

While there's no fool-proof trick to being approved for a personal loan, but there are some little-known ways that you can avoid the rejection pile. Read on to find out how you can avoid your personal loan being rejected.

Young woman looking at her phone smiling

Common reasons personal loans are rejected

How to avoid personal loan rejection

  • You have bad credit history. While "bad credit" is usually pooled into one, there are varying levels of bad credit. For example, you may have never defaulted on any loans or credit cards but you might have applied for five loans in the past two months.
  • Check the credit requirements. You should check what credit rating your lender requires for its lending requirements, and then see if you meet it. If you're required to have good credit, it usually means no negative listings on your file. If you're unsure, it's best to ask the lender before you apply. The majority of lenders have online chat services that can offer assistance. You can also check your credit score with Finder for free to get an idea of your credit position.
  • Insufficient income. The lender can't approve your application if it finds that your income won't sustain your monthly repayments. Therefore, lenders usually have a minimum income you need to earn in order to be eligible for the loan. This minimum may also change depending on the loan product you're looking at.
  • Find out the minimum income. Check if there is a minimum set. The minimum income is listed on finder.com.au review pages, so you can confirm this before you apply. If there's no minimum, work out what repayments you will need to make and if these will be manageable on your current income.
  • Dubious loan purpose. Many loans come with restrictions as to how the funds can be used. If your lender finds out that your loan purpose isn't credible, your chances of having your personal loan application rejected are quite high.
  • Ensure your loan purpose is allowed. To avoid personal loan rejection, check with the lender to see if your loan purpose is okay. If you are taking out a secured personal loan there will be more restrictions, although you may also find limitations for other types of loans.
  • Incorrect details. Lenders will usually verify the details you put in your application and if they find inconsistencies they may reject you.
  • Verify your details. Double-check your details and information before you submit your application so that the lender has no reason to reject your application. Is your application filled out entirely? Have you provided any incorrect information? Also, always be 100% honest.
  • Unstable employment or insufficient employment history. Lenders are very meticulous about the stability of your job. Quite a number of lenders insist that you should have a stable job and should be out of your probation period, otherwise they will reject your loan.
  • Check you meet the employment requirements. Probation period times differ, but lenders usually require three months of payslips. If you're a casual employee looking for a personal loan, you may be required to provide six months of payslips and/or a letter from your employer regarding your job stability. See what the lender requires of your employment and ensure you meet that to avoid personal loan rejection.
  • You hold too many loans. If you're currently holding several loans this could give a lender cause to reject your personal loan application.
  • Don't hold more loans than you can afford. In short, lenders want to be able to lend you money. The main reason they won't lend to you if you have a number of loans already is they don't think you'll be able to pay it back. You could look at consolidating your loans or paying back some of them before applying for any new ones.
  • Insufficiency of asset security. Lots of lenders have restrictions on the type of asset you can use as collateral for a secured loan. For example, secured loans can only be secured by certain assets, such as vehicles or home equity. Secured car loans also usually have an age restriction on the vehicle that you are purchasing. If your asset doesn't meet these requirements, your personal loan could be rejected.
  • Check your collateral is sufficient. See what your lender requires in terms of collateral and check that the asset you plan to use meets their requirements and necessary value. If you're in doubt, get in touch with the lender before you apply.

Personal loan comparison

Now that you know what to look for when comparing personal loans, compare a range of loans below. Once you have compared, you can continue reading to find out what not to do.

Data indicated here is updated regularly
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Service Fee Monthly Repayment
Plenti Fixed Rate Personal Loan

From 6.49% (fixed)
6.84%
$2,001
3 to 5 years
From $149 to $599
$0
You'll receive a fixed rate between 6.49% p.a. and 11.99% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 3 years. Interest and comparison rates calculated for a loan term of 5 years.
Harmoney Unsecured Personal Loan

From 6.99% (fixed)
7.79%
$2,000
3 to 5 years
$575 ($275 for loans of below $5,000)
$0
You'll receive a fixed rate between 6.99% p.a. and 25.69% p.a. based on your risk profile.
Apply for a loan up to $50,000 and repay your loan over 3 or 5 year terms.
OurMoneyMarket Personal Loan

From 6.75% (fixed)
6.96%
$2,001
1 to 7 years
1.5–6% of your total loan amount
$0
You'll receive a fixed rate from 6.75% p.a. to 20.99% p.a. based on your risk profile
A personalised loan from $2,001 to $75,000 that varies based on your credit history and financial situation.
Alex Personal Loan

From 6.95% (fixed)
6.95%
$2,100
6 months to 5 years
$0 (waived $295)
$0
You'll receive a fixed interest rate from 6.95% p.a. to 19.99% p.a. based on your risk profile
Borrow between $2,100 and $30,000 from 6 months to 5 years. Benefit from no ongoing fees. Note: The establishment fee of $295 is waived for all applications until 31 October 2020. Terms & conditions apply.
SocietyOne Unsecured Personal Loan (5 years)

From 7.99% (fixed)
7.99%
$5,000
5 years
from 0% to 5% (capped at $995)
$0
You'll receive a fixed rate between 7.99% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
SocietyOne Unsecured Personal Loan (2-3 years)

From 6.99% (fixed)
6.99%
$5,000
2 to 3 years
from 0% to 5% (capped at $995)
$0
You'll receive a fixed rate between 6.99% p.a. and 17.99% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
Plenti Variable Rate Personal Loan

From 5.79% (variable)
6.78%
$2,001
1 to 3 years
From $149 to $599
$0
You'll receive a variable rate from 5.79% p.a and 11.99% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 12 months. Benefit from transparent costs and a rate estimate before you apply.
NAB Personal Loan Unsecured Fixed

From 9.99% (fixed)
10.88%
$5,000
1 to 7 years
$150
$10
You'll receive a fixed rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
Pepper Money No Fee Personal Loan

From 6.95% (fixed)
6.95%
$5,000
18 months to 7 years
$0
$0
You'll receive a fixed rate between 6.95% p.a. and 17.95% p.a. based on your risk profile
Borrow from $5,000 to $15,000 and use for a range of purposes. Pay no upfront, early repayment or ongoing fees.
Symple Loans Personal Loan

From 5.75% (variable)
6.47%
$5,000
1 to 7 years
from 0% to 5% of the loan amount
$10
You'll receive a personalised interest rate from 5.75% p.a. to 21.99% p.a. based on your risk profile
Borrow up to $50,000 to pay for what you need.
Wisr Personal Loan

From 7.95% (fixed)
8.78%
$5,000
3 to 5 years
$595 (Establishment Fee)
$0
You'll receive a fixed rate between 7.95% p.a. and 19.45% p.a. based on your risk profile
A loan from $5,000 that charges no fees for extra or early repayments. Keep in mind security is required in some cases.
Heritage Bank Fixed Personal Loan
7.99% (fixed)
8.62%
$5,000
1 to 5 years
$200
$5
Choose a fixed rate loan and receive a comparison rate of 8.62% p.a.
Fixed rate loans are available up to $100,000 on terms from 1 to 5 years.
CUA Unsecured Fixed Rate Personal Loan
9.89% (fixed)
10.14%
$5,000
1 to 7 years
$175
$0
You'll receive a fixed rate of 9.89% p.a.
An unsecured loan from $5,000 with flexible repayments and no monthly fee.
MoneyMe Personal Loans

From 8.99% (fixed)
10.68%
$3,001
2 to 5 years
5 - 8% of the principal borrowed, capped at $1,200
$0
You'll receive an interest rate between 8.99% p.a. and 29.99% p.a. based on your risk profile
A flexible personal loan from MoneyMe with access to cash when you need it.
NAB Personal Loan Unsecured Variable Rate

From 9.99% (variable)
10.88%
$5,000
1 to 7 years
$150
$10
You'll receive a variable rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes. Benefit from fee-free additional repayments and a redraw facility. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
CUA Unsecured Variable Personal Loan
11.89% (variable)
12.15%
$5,000
1 to 7 years
$175
$0
You'll receive a variable rate of 11.89% p.a.
Borrow from $5,000 with the option for flexible repayments and no monthly fees.
Heritage Bank Standard Variable Personal Loan
11.99% (variable)
12.61%
$5,000
1 to 10 years
$200
$5
Choose a variable rate loan and receive a 12.61% p.a. comparison rate
Variable rate loans are available from $5,000 - $100,000 on terms of 1 to 10 years.
Latitude Personal Loan (Unsecured)

From 7.99% (fixed)
9.24%
$3,000
1 to 7 years
$250 (Loans under $5000 - $140)
$13
You'll receive a fixed rate between 7.99% p.a. and 19.99% p.a. based on your risk profile
Apply for what you need from $3,000 and use it for a range of purposes. Repay weekly, fortnightly or monthly.
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Compare up to 4 providers

Breakdown of things to consider when applying

  • Avoid multiple applications. When you apply for a personal loan, the creditor will list it on your credit file. Too many applications in a short space of time can have a negative impact on your credit rating and may result in rejection.
  • Keep your record clean. You can make this happen by paying your debts on time and avoid defaulting on any loans. Keep track of your financials and don’t take on loans that you can’t handle to avoid defaults.
  • Check your credit report. You should keep monitoring your credit file and ensure the information is up to date. You need to take out outdated data, erroneous entries and other irrelevant information.

Related reading: How much should you borrow for your car loan?

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Personal Loan Offers

Important Information*
Logo for Harmoney Unsecured Personal Loan
Harmoney Unsecured Personal Loan

You'll receive a fixed rate between 6.99% p.a. and 25.69% p.a. based on your risk profile.
Apply for a loan up to $50,000 and repay your loan over 3 or 5 years terms.

Logo for NAB Personal Loan Unsecured Fixed
NAB Personal Loan Unsecured Fixed

You'll receive a fixed rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.

Logo for SocietyOne Unsecured Personal Loan
SocietyOne Unsecured Personal Loan

You'll receive a fixed rate between 6.99% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.

Logo for Pepper Money Unsecured Fixed Rate Personal Loan
Pepper Money Unsecured Fixed Rate Personal Loan

You'll receive a fixed rate between 6.95% p.a. and 17.95% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Make additional repayments or pay off the loan early, penalty-free.

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