Do guaranteed personal loans exist?

Lenders assess all loan applications based on specific eligibility requirements and lending criteria. This means there are no guaranteed personal loans in Australia. However, you still might be eligible for a loan. Weigh up your options and learn more about the application process in this guide so that you can decide if a personal loan is right for you.

⚠️ 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.

Help! I've been offered a guaranteed loan!

If a lender has offered you a personal loan with guaranteed approval, this is likely a scam. No personal loans are "guaranteed" and lenders that promise you will be approved are often looking to charge you excessive interest and fees or get you to sign a contract with unfair or illegal terms.

You can check if a lender is legitimate by verifying that it's listed with ASIC or seeing if they appear on ASIC's "do not deal with" list. If you think you're being scammed, stop dealing with the lender immediately and report the scam to ASIC.

A selection of loans you can compare

"Am I eligible for a loan?"

Eligibility criteria differs among lenders, which means there are options available for people in a variety of financial situations. This could include:

• People with bad credit history. There are some lenders that will consider loan applications from people with a bad credit history, including those that offer loans without a credit check.
• People receiving Centrelink payments. There are lenders that accept loan applications from people receiving Centrelink payments as income, although there are certain restrictions regarding this. Find out more and compare options here.
• People experiencing unemployment. Some lenders will consider unemployed applicants, as long as they can prove that they have the ability to repay the loan.
• People who are current or discharged bankrupts, or under a Part 9 Debt Agreement. While bankruptcy can severely limit loan options, it may be possible to find a lender that will consider applications.

What's the difference between a guaranteed personal loan and a guarantor loan?

The term "guaranteed personal loan" suggests that someone can get a loan approved regardless of their personal and financial circumstances, which is not possible in Australia. In contrast, a guarantor personal loan is a type of loan where someone else agrees to become legally responsible for the debt if the person who applied is unable to manage it.

This second person is known as a guarantor and can help reduce the risk for lenders when an applicant has poor credit history, low income or no income. While having a guarantor does not guarantee someone will get approved for a loan, it can help increase the chances of a successful application.

What other types of personal loans are available?

As guaranteed personal loans are not available in Australia, here are some of the other options people can consider.

• Short-term loans

These types of loans are often referred to as payday loans because the loan amount and terms are largely based on your income and pay frequency. As a general guide, short-term loans typically offer amounts of between $100 and $2,000 and have repayment terms between 3 to 12 months.

While there are regulations around the rates and fees for these types of loans, they are often high compared to other personal loan options. For example, a payday loan could have an establishment fee worth 20% of the loan amount and monthly account fees worth 4% of the loan amount. You could also be charged government fees and default fees. Learn more and compare payday loans to decide if this option is right for you.

• Secured loans

Secured loans involve you borrowing from a lender and using a large asset, such as a car, a boat or housing equity as a guaranteed security in case you default on the loan. These secured personal loans can be offered as variable or fixed rate options and usually offer a loan term of between one to five years.

• Unsecured loans

Unsecured bad credit personal loans are an option for people with bad credit who do not want to risk a guaranteed asset when they take out a loan. You might also choose to take out an unsecured loan if you want to use the loan to finance something other than a large asset, such as to pay off bills or to put towards home repairs, or even a holiday. Unsecured loans can be dangerous.

Tips to compare loan options

When you compare personal loans, it's important to keep the following things in mind:

• Fees. The lender should set out all the fees you will be charged before you settle on the loan. This will help you get a better idea of the true cost or the loan.
• Rates. You could expect rates to be higher with bad credit personal loans, although it is still important to compare these rates to make sure you are guaranteed to get the best deal.
• The lender. The lender should also come into consideration. You should look at how transparent the lender is with its information regarding fees and charges. You can also read online customer reviews of the lender, and they should be easily contactable.