Can a temporary resident get a personal loan in Australia?
Yes, temporary residents of Australia can take out personal loans, though it may be more difficult to meet eligibility criteria. There are no laws or regulations stopping temporary residents from receiving a loan and the decision lies with the lender. This will depend on the type of visa you hold and not all temporary residents will be eligible for specific lenders.
Since temporary residents are seen by lenders as more risky, you may have to meet stricter criteria regarding employment and income. It’s also possible that you may have to pay higher interest rates and have more limited loan options.
What should I consider when looking for a personal loan as a temporary resident?
The key factors to consider are:
- Lenders may view you as a higher risk. Given your visa status, lenders may consider lending to you as more risky. There’s the possibility you may not be able to repay your loan before your visa expires. They will also take into account that your visa could be terminated at any given point, even if it’s unlikely. As a result, your interest rates may be higher than if you held a permanent visa.
- Loan terms are restricted. Your loan term will also be limited to the length of your visa, which may result in higher monthly repayments.
- Your overseas credit history doesn’t apply. This can be either good or bad news. On one hand, if you have a poor overseas credit history, it won’t count against you. On the other, your good credit history won’t be of any use either. You’ll be starting with a clean slate, and will have to build an Australian credit history from scratch.
- Some temporary visas may not be eligible. Temporary work visa holders have a better chance of getting a loan than other temporary visa holders. This is because they have employment, likely a permanent role, which reduces the lender’s risk. Other types of temporary visas, like working holiday and bridging visas won’t be eligible.
What’s the eligibility criteria for a temporary resident personal loan?
The eligibility criteria for temporary residents is stricter than permanent residents. While each lender will have their own requirements, these are the key factors most lenders will consider:
Eligibility criteria of major lenders
We’ve listed the eligibility criteria of a few lenders, including the Big Four Australian lenders. Keep in mind that even if you tick the boxes, lenders will consider your application on a case-by-case basis.
|Lender||Eligibility requirements||Visa requirements||Review personal loans|
||NAB Personal Loans|
||ANZ Personal Loans|
||CommBank Personal Loans|
|Fair Go Finance||
||Fair Go Finance Personal Loans|
||Westpac Personal Loans|
Can I get a personal loan on a 485 visa?
If you’re on a temporary graduate visa, or the 485 visa, you can work full time but you may not be able to get a personal loan. However, you could apply for a home loan if you need one.
Lenders will be more likely to lend once you transition to another visa category, like a permanent residency, employer sponsored visa or a partner visa. While you wait, you could improve your chance of getting a loan by strengthening your credit score, saving money and finding permanent employment.
What kind of personal loans can I apply for as a temporary resident?
You can generally apply for a secured or unsecured personal loan. Your chance of getting a loan will increase if you opt for the secured option and offer collateral. You should also be able to apply for a car loan and a short-term or payday loan, as these lenders tend to have more open eligibility criteria. There are a many types of loans from many different lenders, so be sure to compare your personal loans to make sure you're getting the best deal.
What can I use a temporary resident personal loan for?
Personal loans are generally flexible when it comes to use, unless you apply for a car loan. With a car loan, you can only use the funds for the purchase of a car and related expenses. Here’s what you can use a temporary resident personal loan for:
- Cars. You could get either a car loan or a personal loan, which you can use to buy a car. A car loan may be cheaper as you can use the car as security.
- Education. If you’re at university and need a loan to cover your tuition fees or buy textbooks, you can apply for a personal loan.
- Work tools. Business owners can borrow to fund or rent the equipment, machinery, or electronics they need for their business.
- Appliances. TVs, refrigerators, washing machines and dishwashers are some appliances you can buy with a personal loan.
- Emergencies. In case of emergency expenses, like car repairs or an unexpected medical bill, a personal loan can help you meet those urgent bills.
How can I improve my chance of approval as a temporary resident?
You can maximise your chance of approval by following a few simple steps, though approval is never guaranteed. In short, to increase your chance you’ll need to prove that you’re able to pay back the loan and that you’re a trustworthy borrower.
- One way to do this is by having permanent employment and receiving a regular income, along with the bank statements to prove this.
- Offering some security, like a vehicle or a term deposit, will also help. The asset will reduce the lender’s risk and increase your likelihood of receiving a loan.
- Building a good credit history by paying your bills on time and saving shows you are responsible with your money which can also go a long way to improving your odds.
How can I compare personal loans?
By comparing personal loans, you can find a loan that both suits your circumstances and your wallet. There are a few things to look out for while comparing personal loans.
- Interest rate. Comparing interest rates between lenders can tell you if your lender is offering you a competitive rate. Keep in mind that the rate advertised may not be the same rate you receive. This is because some lenders offer personalised or risk-based interest rates, tailored to your risk profile. The higher the risk, the higher the interest rate and vice versa.
- Comparison rate. The comparison rate includes the interest rate and other fees and charges that come with the loan, such as application and monthly fees. These fees will ultimately increase the cost of your loan. The comparison rate helps you understand the loan's total cost, but is only an indication.
- Loan terms. Most personal loan terms range from 1 to 7 years. For temporary residents, you should look at the length of your visa as an indicator of your loan term. Keep in mind that with short terms, your monthly repayments may be higher. Longer terms come with lower monthly repayments, as you’re able to spread the cost for longer. But you’ll also be paying more in interest.
- Repayment flexibility. Are you able to repay the loan early without penalty? Can you make additional repayments without being charged? Can you tailor your repayments according to when you get paid, that is weekly, fortnightly or monthly?
- Asset requirements. This usually applies to secured personal loans and car loans. Before you apply for the loan, you need to check if your asset meets the lender’s requirements. This can be the age of your car or how much you currently have in your term deposit.
- Eligibility and visa requirements. This may seem obvious, but looking into it can help you filter lenders. Some may refuse all types of temporary visas and may only accept a subclass 457 visa. Some lenders may also have requirements on the time left on your visa. Looking into their requirements can help you determine whether you can apply. You should also meet their income, employment and credit requirements.
What are the pros and cons of personal loans for temporary residents?
- Overseas credit history does not count. If you have a bad credit history abroad, it does not play a role in applying for credit in Australia.
- Build credit history. By taking out a loan, you can build your credit history and improve your chance of getting more credit in the future. This is only the case if you make your repayments on time and meet your credit obligations.
- Flexibility. Personal loans are generally flexible. They allow you to pay off your loan over a term of 1 to 7 years, depending on when your visa ends. Depending on the loan, you can also use the funds for a variety of purposes.
- Good overseas credit history does not count. If you have a good credit history back home, this will not count in your favour.
- Higher rates. You may receive higher interest rates depending on your risk profile. This can make the loan more expensive.
- Fewer choices. Not all personal loans are available to temporary residents.
- More documentation. You may have to show more documentation than a permanent resident or citizen of Australia. You will also have to provide a copy of your passport and visa, along with details of your work history in Australia.
How can I apply for a temporary resident personal loan?
The personal loan application process is basically the same for a temporary resident. But before you apply you need to make sure the lender actually accepts applications from borrowers with your specific visa type.
- Work out what kind of loan you need and how much you want to borrow. Use a personal loan repayment calculator to work out your repayments and see how much you can afford to borrow.
- Start comparing loans and lenders. Look for loans with low interest rates and minimal fees.
- Before you submit an application, check a lender's website carefully to see if you can get a loan with your visa type. You might find the information hidden in an FAQ section, or you might need to use the lender's chat support function to find more information. Most lenders won't approve loans for borrowers on student or working holiday visas, for example. But they might approve borrowers with specific skilled work visas.
- Once you've found a suitable lender, apply for the loan. You'll need to provide some information to the lender, including personal ID, proof of employment, an Australian bank account and evidence of income and savings.
- Wait for approval. It won't take long to get your application approved or rejected. A rejection can temporarily hurt your credit score. So before you rush to apply for another loan from a different lender, rethink your approach. Work out why you were rejected. You may need to borrow less, provide some kind of security for the loan or improve your credit score before applying again.
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