Am I eligible for a personal loan?

Find out everything you need to know about personal loan eligibility to give yourself the best chance of being approved.

Applying for a personal loan, whether it's secured or unsecured, fixed rate or variable, for $3,000 or $30,000, is taking a big financial step. Every loan application you make is listed on your credit file, and once you are approved, you want to make sure you've applied for the right loan.

Below you'll find a guide to each of the eligibility criteria that lenders consider when you apply for a personal loan. While standards differ between lenders, after you read this guide you will have a better understanding of how to work out if you are eligible for a loan, and how to find a loan that will meet your needs.

See if you'll be eligible to apply
Income. Lenders will either have a set minimum income that you need to earn, for example, $35,000 p.a., or only require that you earn a regular permanent income. If the latter is the case, it's best that you determine whether the loan you're applying for will be affordable on your current budget.
Employment. This differs among lenders. If they have an employment requirement, it may be that you need to be in "regular" employment. That is, you can't be employed casually. If you are employed casually or part-time you will still have loan options. For other lenders, they may just require additional details for self-employed borrowers.
Centrelink. Many banks and lenders do accept Centrelink as a form of income for personal loans. However, you will need to be earning a supplementary income and will need to meet the minimum income requirement.
Credit history. You will generally need good credit history to apply for a personal loan, especially if you're applying at a traditional bank. If you do have a few negative marks on your credit file you may be able to apply with your current bank if you have good transaction history or with a bad credit personal loan lender.
Loan security. If you're applying for a secured loan, such as a car loan, your secured asset will need to meet eligibility criteria as well. For instance, the vehicle may need to be under a certain age or be of a certain value. Some lenders only finance new cars, but you can find loan options for used cars.
Assets, debts and expenses. You will be asked to list your assets, debts and expenses on your application and these will all inform the lender's decision as to whether to approve you for a loan. Assets may boost your application whereas debts, such as credit cards, store cards or other loans, can hinder your applications. Expenses are always estimated but lenders generally have a good idea when you're under or overestimating based on data of other customers.

Tips to get your personal loan over the line

If you're unsure about your eligibility, consider the following tips to help give your personal loan application a boost:

• Open a transaction account with the lender you're applying with. If you're applying with a bank that has transaction accounts and the personal loan isn't time-sensitive, establishing a banking history with the lender can help get your application across the line. It can also speed up the application process.
• Reduce the limit of your credit card/s. Not using your entire credit card limit? Consider lowering it if you're not planning to use it soon. You'll need to list the total limits of your credit cards on your personal loan application and any credit limit will be seen as a potential debt by the lender.
• Pay off some of your credit card before applying. While the Australian credit scoring system doesn't work in the same way as the US, where paying off your credit score can lower your credit score, it may help your loan application. If you take a look at your loan application (before submitting it) and the lender asks what is owing on your credit cards, see if you can pay down the cards before sending in the application. They are able to check the limit of your card on your credit file but not the amount owing – this is up to you to tell them.
• Make sure you're out of your probation period before you apply. Lenders don't want to take the chance of giving you a loan during your probation period. They will not approve a loan if you haven't been employed at least three months, no matter how secure you tell them the role is – if you have been employed six months your employer may receive a call to confirm you're out of your probation period.

Remember that no personal loan application is guaranteed, so use the guide above to ensure you're giving yourself the best chance of approval you can.

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