A guide to getting a personal loan if you’ve just entered adulthood.
If you've just turned 18 you may be excited at the prospect of many things becoming available to you – alcohol, voting and yes, loans. However, finding credit may be more difficult than simply applying and being approved. When you first turn 18 you will have little to no credit history and you may have little savings. So what are your options if you're an 18-year-old who needs a loan? Read our guide to find out.
I'm an 18-year-old who needs a loan. What are my options?
If you've just turned 18 you have various loan options that you can consider.
- A loan from your current bank. One of the problems 18-year-olds encounter when trying to be approved for loans is that they have limited or no credit history. One way to get around this is to apply with your current bank. You're likely to have a long history with your bank with transaction accounts, travel cards and any other products you've held, so they may be more willing to give you a loan.
- Unsecured loans for lower amounts. If your bank doesn't have a loan you want to apply for, you can consider personal loans for lower amounts. The standard minimum amount for loans is usually around $5,000, but you can find some lenders offering $3,000 or even as low as $1,000. Compare your options and only apply for as much as your need.
- Secured car loans. If you want to buy a car, secured loans are less risky for lenders because they will be able to recoup their losses if you default. New and used car loans are available and you can get a lower rate than with an unsecured loan.
- Getting a guarantor. If you find you are ineligible for a bank loan, you may consider asking your parents, another relative or even an older close friend to go guarantor for you. This person will be taking on a large responsibility because they are agreeing to take on the loan payments if you can no longer make them. You can compare loans that accept guarantors on this page and joint application personal loans on this page.
Compare your loan options
Click through the tabs below to compare loan options from a range of lenders.
- No monthly fees
- No early repayment fees
- Borrow up to $75,000
100% confidential application
IMB New Car Loan
Apply for IMB New Car Loan and enjoy a great low fixed interest rate with no ongoing fees.
- Interest rate from: 5.99% p.a.
- Comparison rate: 6.34% p.a.
- Interest rate type: Fixed
- Application fee: $250
- Minimum loan amount: $2,000
- Maximum loan amount: $75,000
These loans can help you buy a new or used car.
- Redraw facility enabled
- No early exit fees
- Borrow up to $55,000
100% confidential application
NAB Unsecured Variable Personal Loan
NAB offer a low interest personal loan with a low ongoing fee. Borrow up to $55,000
- Interest rate from: 14.69% p.a.
- Comparison rate: 15.55% p.a.
- Interest rate type: Variable
- Application fee: $150
- Minimum loan amount: $5,000
- Maximum loan amount: $55,000
Use the funds from these loans however you need to.
- Centrelink borrowers considered
- Fast approval service
- Borrow up to $2,000
100% confidential application
Sunshine Short Term Offer
This is a short term loan offer with a fast and easy online application for bad credit borrowers who are employed. You can apply today to get approved for up to $2,000
- Loan amount: $2,000
- Loan term: 9 weeks
- Turnaround time: 30 Minutes - conditions apply
- Fees: 20% of borrowed amount + 4% of borrowed amount each month
- Bad credit borrowers OK
- Quick and easy Approval
- No Credit Checks - Must be employed
These loans are designed as emergency stopgaps when you're caught short before payday.
Tips to be approved for a loan at 18
- Show that you have savings. If you can show the lender that you're good at saving it may be more willing to approve you. A steady savings history will work best with your current bank as they can view your account information when you apply.
- Offer a deposit. Having a deposit when you apply for a car loan shows you're in a good financial position. The larger the deposit the less you need to borrow, and the more likely an approval may be.
- Get a letter from your employer. If you're only employed casually or have not been employed for long, a letter from your employer stating the security of your employment may help your application.
- Apply for a lower amount. Applying for too much when you have little credit history or don't earn a high income can be a red flag to lenders and result in an automatic rejection, instead of an offer for a lower amount.
- Apply for a secured loan. Secured loans, such as car loans, are less risky for banks because they will be able to recoup their losses.
How you can compare your loan options
- The interest rate the loan comes with.
Check whether the interest rate is fixed or variable and how competitive it is compared to other similar products.
- How much you're able to borrow.
Lenders offer varying minimum and maximum loan amounts, but what you're offered ultimately depends on what you can afford to repay. This is determined by the criteria set by the lender.
- The features on offer.
Have a look at the different features on offer, which you can find out more about by reading the reviews on finder.com.au. It’s important to familiarise yourself with the value-adding features of a loan. These can include the ability to make extra repayments, an offset facility or extended warranty on a car loan.
- The fees you will be charged.
There are different types of fees you can be charged, ranging from establishment fees to monthly fees and early repayment fees. Find out what charges are associated with your loan before signing on the dotted line.
Weighing up the benefits and drawbacks of applying for your first loan
- Get access to funds. This is an obvious ‘pro’. Get access to the funds you want to make the purchase or investment you need.
- Build up your credit history. Acquiring a loan allows you to establish and build your credit history. This ultimately affects your eligibility for other types of loans and access to better interest rates as well.
- Limited loan amounts. If you have no or limited credit history you may only be eligible for a small loan, which may not be enough for what you need.
- Risk of getting into debt. Taking on any loan comes with risk, so make sure to budget your repayments and don't apply for a higher loan amount than you can afford.
Questions 18-year-olds may have about loans
What do I need to apply for a loan?
Lenders will have different application processes. Generally, you will need to provide a form of documentation, such as a driver's licence or proof of age card, some personal and contact details, information about where you work and your income and other financial details.
How can I get the lowest rates?
Compare the rates offered by different lenders and find the loan you are eligible for with the lowest rates. Remember to check the comparison rate as this includes fees and is more representative of the true cost of the loan.
I applied for a loan but was rejected. How quickly can I apply for another one?
Every application you make for any form of credit will appear on your credit file and affect your credit score. Applying for too many loans at once will not only negatively affect your credit score but be a red flag to lenders, who may reject you for further loans. You may want to wait to make another loan application, especially if you have limited to no credit history.