Category: Tips

Tips For Using Your Business To Finance Business Expansion

Business Expansion | LoanOne

When you first launched your business, there is a good chance that there weren’t a lot of options available to you for borrowing money. Usually, it takes time to get your credit score built up and lenders don’t like taking big risks on brand new companies.

This often results in many new business owners factoring in their receivables whenever they need some extra money.

However, if you have been in business for at least a couple of years, it might be possible for you to upgrade your finances. There is a natural progression at that point to add asset-based loans along with factoring.

Factoring Limitations

Factoring involves selling some of your customer invoices off to a financing company, which is called a factor. You will then be paid upfront for the amount of the invoices by the financing company, less their fee, and they then collect payments from your customers.

Although factoring is convenient, it also is limiting. You only are able to borrow based on the sales and account receivable collections that your business is making. If the only way to increase your revenue is through borrowing money for expansion, factoring can leave you stuck. You are at the point where you aren’t making the necessary sales to borrow additional funds but without additional financing, you can’t make the extra sales.

Advantages to taking out an Asset-Based Loan (ABL).

One way that you may be able to get out of this tough situation is to take out an asset-based loan. An ABL involves borrowing money and then paying it back with interest, just like you do with a traditional bank loan. The main difference is the loan is secure with valuable business assets – such as certain machinery or your inventory. When they are first getting started a majority of businesses don’t own those assets yet, but after a couple of years it is more likely that they will have the necessary resources for taking an ABL out.

The main advantage to taking an ABL out is that more financing will be accessible to you. Your financing will not be limited to the amount of your unpaid receivables. That can significantly free more money up that can then be used for growing your business. In certain situations, an ABL might have lower borrowing costs than factoring does. However, that isn’t always true, so you need to compare the numbers for both of the scenarios.

Using Your Business To Finance Business Expansion

Things to consider before you take an ABL out.

Before you get an ABL, there are some drawbacks that you need to consider first. If you are going to borrow money using this type of loan, you need to make sure you will be able to handle making your loan payments. If you are unable to keep up with your loan payments, eventually your lender could end up seizing your asset. Losing machinery or inventory when your business is struggling already would worsen the situation even more.

You will also have to pay interest on the money that you borrow. It can add up and become a significant cost over time and has the potential for hurting your bottom line. If your company is going to borrow money, be sure you have a plan for spending it productively and in such a way that it will put your business in a much better financial position.

When an ABL is used properly, it can be a very valuable financing strategy to use. When ABL is combined with factoring, it should give you access to all of the money that you need for taking your business up to the next level.

Advantages of Online Loans

business loan online

Online loans have become more and more popular, and there is a reason why. There are many benefits you can expect to get from online loans. Many people today do their shopping online, invest money online, and even book an appointment online. The same case applies to loans. Here are some advantages of online cash loans.



When applying for an online loan, you don’t have to leave your home, you can do it from the comfort of your home without moving an inch. As long as you have your budget to hand, then you will find that the application forms are easy to fill in. It will not take you much time to apply for the loan, although you need to take some time in considering whether you need the loan.



There is no need of worrying that your friends and family will see you applying for the loan. People usually want their financial matters to be kept private. If you are one of them, then you will find it easier applying from the privacy of your home. You won’t be seen getting into a loan shop or waiting in line at a loan shop or bank.


24/7 Applications

There are no worries with time because you can apply any day and any time you want. You can even send the application on a bank holiday. This is because websites do not have an opening and closing hours, making it a great option. You should keep in mind that the applications might not be immediately processed. Check the processing times of the lender before you apply.


Extra security

The online loan application will provide you with security. You can know whether the lender is approved. There are some doorstep lenders who turn out to be loan sharks. Loan sharks are looking for ways to prey on the desperate and vulnerable. You will also have not to worry online because the data is securely stored.


Comparison options

When you go to a bank or loan shop, you will just be asking money from one lender. Doing online will give you the freedom to choose from different lenders and products. There are payday loan comparison sites you can use. You can also compare the loan types. Another option you can get online is peer to peer lending.


Latest technologies

You will be able to take full advantage of the latest technological developments when you are applying for online loans. There are some online lenders who will link to your online banking, which makes it much easier for you. You can manage to avoid extra fees and charges when you link to your online banking. The lenders will be provided with read-only access so they can check your statement without changing anything.

business startup loan


Personalized lending decisions

Complex computer algorithms can use your details to make decisions, and this makes the decisions more personalized. If the application is approved, then it will have passed the assessments. If the application is declined, then there will be a good reason for it. Numbers and figures will be used to make the decision when you apply for a loan in person. There are many factors that are considered when you apply for the loan online.



When applying for a loan in person, you might find yourself having to book an appointment and waiting in a queue. There is also having to go to the bank or loan shop. Online applications are faster because you just need to go online. You can expect to get your money in the shortest time possible when you apply for an online loan.


Unsecured debt

Online loans are normally unsecured debt. You don’t have to put up your belongings as collateral. Other lenders might ask you for to provide a collateral such as your car or property for them to give you the loan. Your possessions will not be at risk when you choose online loans.


Easy to keep track

You will be able to track your online borrowing more easily. You will be able to see how much debt you have and the payment dates. You can also get an SMS or email to remind you so that you don’t miss on repaying the debt on time.

Online loans will prove to be a great option the next time you need some money.

The Types of Loans Fall Under the NCCP Act


What is the NCCP Act?

The National Consumer Credit, or NCCP, is a legislation that is designed to protect consumers and ensures both ethical and professional standards in the finance industry, through the National Credit Code (NCC).

The NCCP is regulated and enforced by The Australian Securities & Investments Commission (ASIC) in accordance with the NCC.

The NCCP states that both lenders and mortgage brokers must hold a credit licence or must be registered as an authorised credit representative and must adhere to the rules that are set out in the NCCP Act.

What loan types are regulated?

Generally, almost all home loans and applications are regulated under the NCCP Act.

Although the rules that are associated with this are complicated, a loan should meet the following conditions:

  • The borrower is a natural person
  • A charge has been made for providing the credit
  • The provider of credit provides the credit through the course of a business
  • The credit is provided completely or largely;

These conditions signify that most standard home loans are regulated in accordance with the NCCP Act.

What loan types are unregulated:

There are some exceptions to loan types that are not regulated under the NCCP Act. Unregulated home loans include:

  • Loans that are in the name of a company; not a natural person
  • Loans that are predominantly used to invest in commercial property, shares or a business.
  • Unsecured loans where the applicant for the loan is a corporate entity and the purpose of the loan correlates to commercial or business purposes.

The process of applying for a home loan:

Upon applying for a loan with a lender or mortgage broker, they must follow the specific processes that have been set out in the NCCP Act.

  1. Enquires: Your chosen mortgage broker must make enquiries to your current financial position, requirements and any objectives that you may have.
  2. Verification: The mortgage broker must take the necessary steps to verify your financial position.
  3. Preliminary assessment: After all of the relevant information has been gathered from the previous steps. The broker must conduct a preliminary assessment of the loans that are best suited to you before recommending them to you.

What does ‘not unsuitable’ mean?

In accordance with the NCCP Act, the mortgage broker or lender must provide you with a loan that is not unsuitable.

A loan is deemed as not unsuitable by the ASIC if:

  • The loan meets your specific requirements and objectives
  • You have the ability to repay the loan without enduring considerable financial hardship

The term ‘not unsuitable’ was selected as it places the responsibility on the applicant of the loan to prove that the loan was unsuitable, rather that be the responsibility of the lender to prove that the loan was suitable.

Can’t I just be told which lender and options are best?

Often, many applicants of loans will want to know the lender that they should apply with, along with the interest rate that they will receive, before they have undergone the first steps properly.

It is not possible to recommend a lender, or be given an interest rate, without understanding an applicant entire situation and the supporting documents as it is against the NCCP Act. Without this information, the applicant cannot be given accurate information.

What about low doc loans?

In accordance with the NCCP Act, both lenders and mortgage brokers are required to take the necessary and reasonable steps to verify a loan applicants financial position, however, this is contrary to the concept of a low doc loan, where the applicant does not need to provide evidence of their income.

In order for lenders to work around this issue, they have created an ‘alternative verification’ method.

By an applicant only providing some documents as supporting evidence to their income, the lenders are able to fulfill their obligation in accordance with the NCCP Act without the requirements of tax returns or financial statements.

The documents that lenders most commonly ask for are:

  • BAS Statement: The lender may request a 12-month Business Activity Statement (BAS) to estimate the applicant’s income.
  • Trading Statements: The lender may request for bank statements from the previous 6 months from the business to estimate the applicant’s income.
  • Accountants letter: The lender may have an accountant letter template where they require the applicant’s accountant to sign that will confirm their income.

How to Get Your Small Business Loan Approved

business loan online

Getting approved for a business loan is a large hurdle that many small businesses have to face and this is mainly due to the rigorous lending guidelines that big banks stick to. However, obtaining finance from an alternative lender is often an essential and attractive means for small businesses to start, begin to grow and expand or simply for a small business to cover their daily management expenses.

So, what should you include in your small business loan application?

When gathering information to incorporate into your loan application, you should aim to answer the following questions:

  • What is the purpose of the small business loan? Lenders will want to know what the loan will be used for, and that you have the management skills and cash flow to pay it back.
  • How much you intend to borrow and over what term? This will help both you and the lender to determine what options are available to you, along with how the loan will match up to your cash flow.
  • How soon will you need the money? If you will require the money in a singular lump sum or in numerous payments?
  • How long will it take you to pay back the loan? This will assist in determining whether your small business has the necessary cash flow to actually pay the loan back, but it will also determine the terms and conditions of the loan repayments.

When composing your small business loan application, you will have to work to boost your odds by standing out from the crowd and displaying that your small business has greater value and potential than other small businesses. A good loan application must convince the lender that the money that you will receive will support your small business in either becoming more profitable, or that this money is essential to its continued operation, along with the information to demonstrate that you will have enough revenue and cash flow to pay the lender back.

5 Things To Do Before You Apply For a Small Business Loan

Despite the fact that applying and securing approval for small business loans can be difficult and stressful at times, the more prepared you are, the better your chances are of getting approved.
Here are our best tips to improve your chances of securing your small business loan.

1. Determine why you need a small business loan:

determine if you need a loan

Many lenders will ask you why your small business needs a loan and your answer will most likely fall into one of these categories.

  • To begin and establish your business.
  • To manage your daily expenses.
  • To grow and expand your business.
  • As a safety cushion.

2. Decide the type of loan that is right for your small business:

Your reason for applying for a loan will dictate the type of loan that your small business will get.

For small businesses that are only just starting up, it is generally nearly impossible to obtain a loan within a company’s first year. Many lenders will require cash flow, along with supporting documents, in order to support the repayment of the loan, which is why so many startups are immediately disqualified from receiving financing.

However, for small businesses with a minimum of a year of cash flow history and revenue evidence, they will have a wider range of options.

3. Decide on the best small business lender:

Small businesses can acquire loans from several lenders including big banks and alternative online lenders.

When looking for the right small business loan lender, approach the selection process just as you would if you were shopping for a car. Seek out lenders that offer the type of loan you are looking for and once you have determined the lenders that are right for your small business, you should compare two or three options that offer similar annual percentage rates, along with their terms.

4. Determine if you qualify for a small business loan:

  • One of the most substantial factors that will determine whether you will qualify for a small business loan is your credit score rating and history.
  • Along with your credit score, most lenders will consider other factors such as the amount of time your business has been in operation.
    Evading payments of loans, having an unresolved debt and the lack of consistent income are all factors that will work against you when applying for a small business loan.
  • If you are currently in the midst of any of these issues, then it is in your best interest to address and resolve as many of these as possible before you begin to apply and take out a loan as it can significantly improve your chances of being approved.
  • Most online and banking lenders will require a minimum annual revenue, and depending on the lender, this amount can range anywhere from $50,000 to $150,000. It is advised that you know yours, along with the minimum a lender requires, before you apply for your small business loan.
  • Examine your business’s financials carefully and thoroughly, especially your cash flow, to evaluate the amount you can sensibly afford to apply towards your loan repayments each month. In order for you to easily and comfortably repay your loan, your small business’s income should be at least 1.25 times the businesses total expenses, ensuring that you include the new loan repayment amount to this total.

5. Gather necessary documents:

Once you have compared your lending options, it is now time to apply for specific loans that fit your small businesses financing needs and that your small business qualifies for.
You are able to apply for multiple small business loans from various lenders within a short time frame, typically within 2 weeks, without inflicting a negative outcome on your credit score and rating.

Depending on your chosen lender, you will be required to present a combination of relevant documents along with your application. These documents may include, but are not limited to:

  • Both the businesses and your personal tax returns.
  • Business and personal bank statements.
  • The business’s financial statements.
  • Relevant business legal documents such as the commercial lease or franchise agreement.

Whether you are applying for a small business loan, big or small, these tips will make the job easier and more successful.

Why LoanOne?

LoanOne knows how Australian small businesses work and provides small business owners with easy, fast funding solutions that will help your small business grow.

The business loans from LoanOne are different to other, traditional business loans as our loans are flexible, paper-free and unnecessary extensive supporting documents are not required. We aim to help businesses who need loans fast!

LoanOne offers businesses:

  • A fast and easy online application and a timely loan approval.
  • The most secure technology that will ensure that any information that you submit online remains strictly confidential.
  • A friendly customer service experience via phone or email.
  • No hidden fees! We have competitive fees that are consistent with financial industry standards and are completely transparent.

With LoanOne, get fast, simple and safe loans! Fill in their 5-minute online application today!

Fast Cash Loans: Tips for Getting Quick Easy Loans Online

fast cash loans

If you have found yourself strapped for cash and are in the midst of a financial emergency, it is in your best interest to start looking into short term fast cash loans.

Not only you are able to apply for easy loans online without even having to ever leave the comfort of your own home, but the approval for the loan can be given on the same day, as long as you have a steady job, a not too bad credit history and a bank account.

Although taking out an easy loans may seem simple enough to obtain, contrary to popular belief, there is a little more than meets the eye that you should consider when deciding to take out a loan.

To avoid getting burned and ensure that you have chosen the right lender, it is important to consider a few key factors that can make or break your easy cash loan experience.


Best Tips for Getting Short Term Loans Australia

Here are our best tips for getting the best short term fast cash loans.

    • If you are concerned about your credit rating and how it can affect your loan, you should seek out lenders that have bad credit considerations for their fast and easy online loans. With LoanOne, applicants with low credit records are still considered for easy loans online. The approval of the loan is based on a combination of various factors including an individual’s income and security.
    • When seeking the right fast cash lender, it is in your best interest to stick to the internet. Even though your local area may have loan vendor options that are openly available to you, it is most likely that they will pale in comparison to the plethora of loan vendors that are available online.
    • Be sure to consider numerous lenders – do not just settle for the first one that you happen to stumble across. There is a common misconception that all fast cash loan lenders are the same, however, in reality, this is not the case. Ensure that you take some time to look through reviews of the lender and customer experiences of a handful of lenders. This is one of the best ways to examine just how different lenders can be; it doesn’t take long and can save you a lot of trouble in the long run.
    • With so many fast cash lenders that are desperate to attract potential customers, it can mean that you will be offered a lot of discounts in terms of your interest rates and applicable fees. With this in mind, it is important to remember to not rush the selection process. Do your research and ensure that you have found a lender that has a good track record and decent interest rates.
    • Be sure to check if the loan that has been taken out will automatically be renewed if a payment is not made on the loan. If the answer is yes, ensure that you find out the interest rate, and if any fees will incur with the loan renewal.
    • Read the loan contract carefully and meticulously.
    • When applying for a easy loans, it is extremely important that you have an understanding of every factor and piece of information possible, including all fees, interest rates and the terms of payment.

Many fast cash loan lenders have various payment options that are available for the length of your loan and the type of payments. Selecting the right short-term loan means that you must also choose the payment option that is best suited to you. Most of the loans that are offered from reputable lenders are usually quick and easy, however, it is important that you consider the long term and select the type of loan that is right for you personally.

looking for fash cash loans online

The factors that you should consider are:

1. How long will it be before you receive money next?
2. What payment option is the best suited to you and your circumstances?
3. What is the most cost-effective loan option?

To avoid regretting your decision in the future it is essential that you take the time to consider these factors. It is best to find a lender that has dynamic lending terms to ensure that you are only paying for the money that you actually use.

    • It is essential that you do not stretch yourself when applying for short term loan. Only borrow what you absolutely need. Often, the more money that you borrow, the higher the interest rates that are associated with the loan and we understand that there is nothing worse than having to borrow money that you do not require which can ultimately mean paying almost double the amount of interest.
    • It is essential that you hold up your end of the contract and pay the money back when it is due. If, for some reason or special circumstances occur and you cannot make repayments on time, you should transparently explain your situation to the lender and request an extension. Many lenders will be more than happy to oblige the request and offer you an extension.
    • The personal information and especially your banking information that you share online is more vulnerable than ever. It is so important to be smart about your data security. One of the best ways to ensure that your information is not being stolen is to look into the lender’s reputation. Although this is a great way to start gathering information about an online lender, it is important to note that reviews can easily be faked. Another is to ensure that any websites where you input any personal information are SSL encrypted. This essentially means that the website address begins with ‘https’ rather than just ‘http’. Think smart and make wise decisions about your personal information and security.


Why LoanOne?

LoanOne is one of Australia’s most responsible finance providers, offering fast cash advances to Australians. The solutions that we offer everyday Australians do not require a mountain of paperwork, long delays, hidden fees or those damaging fine prints. At LoanOne, we have transformed the way Australians access fast cash advances online!

With LoanOne, get fast, simple and safe loans!

Fill in our 5 minute online application today!

How to Choose the Right Small Business Loan – Same Day Loans?

small business loan

If your small business is in need of a loan, we know that trying to find the right lender for your businesses needs and the right type of loan can be an extremely confusing and complicated process.

When your small business is applying for a loan, it is crucial for you to prepare and develop an in-depth business plan and to fully and transparently inform your chosen lender about the proposed venture. The information that is offered will help the lender to provide you with the right type of finance solution, along with any advice moving forward.

In order for you to make the right decision, you must first answer a few essential questions:

  • How much does your small business need?
  • What will the money be used for?
  • How fast do you need to acquire the money?
  • How long will it take your small business to pay the loan back?
  • How long have you been in business?
  • What is the current financial situation of your small business?
  • How much, if any, collateral are you required to put forward for your loan?

By thoughtfully answering these simple questions, it will help to determine if your small business should seek to pursue a government-backed loan, a loan or line credit from a bank, or, a cash advance, line of credit or a loan from an alternative lender.

Types of Lender

If you are unsure of what type of lender is best suited for your small businesses, then we have devised an in depth breakdown of what you must know about each type of lender before applying for your small business loan.

Conventional Bank Loans

A conventional bank loan, either through a mortgage or a traditional loan, is similar to that of a homebuyers loan, however, they are not offered of secured by a government entity. Finances for a small business are most generally acquired through traditional bank business loans.

One of the biggest benefits of conventional bank loans for small businesses is that they, most often than not, carry low interest rants. Along with this, as no federal agencies are involved in the decision making process, the approval process can generally be much faster. However, these types of conventional bank small business loans typically involve considerably shorter repayment terms and often involve balloon payments. It is also much more difficult for small business to gain approval for these types of conventional bank loans. Even though in recent years, approval rates have increased and improved for small businesses, the big banks only approve marginally more than 20% of the loan requests that they receive. On the other hand, smaller banks approve fewer than half of the loan requests that they receive.

Alternative Lenders

Alternative loan lenders are especially attractive to small businesses that may not have a particularly excellent financial history as their approval requirements tend to be much less strict and are much more flexible. Alternative lenders usually offer straightforward and quick online applications, typically can make approval decision in just a few hours and can provide small businesses with same day loans.

The benefits of working with an alternative lender are that your small business is not required to have an immaculate financial history, there are only very few restrictions for what the money can be used for, and, the most attractive of all, the loans can be approved almost instantly.

The disadvantage, however, is that the interest rates that are attached to these loans may be somewhat higher than those rates that are charged by the big banks. Alternative loan lenders for small businesses are much more willing to provide small businesses and companies with a loan, even if they do not have outstanding credit ratings and this increased risk that these alternative lenders take onboard is simply reflected in the interest rates that they charge.

Risk Assessment

business loan
Conventional banks and alternative lenders will assess your small business’s risk profile when they are considering and revising your loan application. By understanding what lenders look for when they are considering small businesses that are at a high risk will assist you in presenting your business in the most favourable manner.

Generally, lenders will examine:

  • The level and nature of the security of the loan. In other words, what you can offer to give them if you cannot repay the loan, also known as collateral.
  • The businesses ability to make regular, and on time, loan repayments, also known as the cash flow risk.
  • The businesses ability to eventually repay the debt in the allotted time, along with any other debts that the business may have obtained.

As a small business owner, you will need to be able to effectively assess the level of cash flow for the businesses specific circumstances. To a lender, one of the most important factors that is considered when offering a loan is the projected cash flow requirements of the business, as this is the amount of cash that is left after expenses that will repay the loan, not income. This will also exhibit you as an effective manager.

Types of Loans

Loans from conventional lenders such as banks, and alternative lenders offer the following loans for small businesses:

Working Capital Loans

Working Capital Loans have been designed as only short-term, temporary money solutions for small businesses that require money in order to assist them in running their operations. Working Capital Loans are both attainable from conventional banks and alternative lenders.

One of the largest advantages of obtaining a Working Capital Loan is that it offers small businesses the capability to keep their daily operations running while the seek other processes to increase their revenue.

On the other hand, one of the downsides of obtaining a Working Capital Loan is that they often are attached to higher interest rates and have shorter repayment terms.

Equipment Loans

Both conventional banks and alternative lenders offer small businesses their own class of equipment loans. These equipment loans offer small businesses money for essential office equipment, such as computers or copy machines, or other necessary equipment such as machinery or tools.

Rather than making large, initial purchase of these items that must be paid upfront, Equipment Loans allow for the business owners of these small businesses to make fixed monthly repayments on these items.

Obtaining an Equipment Loan is advantageous for small businesses as they aid in preserving cash flow and as they do not require any large down payments and some of these items may receive tax write-off benefits.

One benefit of Equipment Loans for small businesses is they are considerably easier to obtain than other types of loans for small businesses as the equipment that is purchased can be used as tangible collateral for the loan.

Merchant cash advance

Merchant Cash Advance loans are offered to small businesses based on the amount of their monthly credit card transactions. Small businesses can often receive a loan, or cash, advance of up to 125% of their monthly transaction amount.

The terms that are associated with repaying the merchant of a cash advance varies from lender to lender. There are some merchants that take a fixed amount from the business’s account each day, while other lenders will take a percentage of the sales that are made daily to the credit card.
The benefit of a Merchant Cash Advance for small businesses is that they are comparatively easy to obtain, the cash advance can be received in just a couple of days and that loan is repaid to the lender directly from the sales of the credit card.

One of the biggest downsides of Merchant Cash Advance loans is the expense that is associated. The interest on these loans can be as high as 30% per month, however, this number depends on the lender and the original amount that was borrowed.

Lines of Credit

Similar to that of Capital Loans, lines of credit offer small businesses with the money that is required for their daily cash flow needs. This type of loan is not recommended for larger business purchases and can be available for a range of time spans, anywhere from as short as 90 days and as long as several years.

When obtaining a Line of Credit, small businesses only take the amount that they need and therefore only pay interest on what they actually use, rather than paying interest on the entire amount of the loan. This type of loan generally have longer repayment terms and give small businesses the ability to build up their credit rating, should they make the interest repayments on time.

The disadvantages of Lines of Credit are the added fees that are applied to small businesses that are at risk of building a considerably large amount of debt with this loan option.

Professional Practice Loans

applying for business loan
Professional Practice Loans have specifically been designed for those who provide professional services, such as those small businesses that are in the healthcare sector, offer accounting, services or legal, insurance and veterinary fields of practice. Professional Practice Loans are generally offered to small businesses to purchase a practice, obtaining new equipment or to refinance debt.

Franchise Start-Up Loans

Franchise Start-Up Loans have been designed for entrepreneurs that require financing in order for them to open up their own franchise businesses. These Franchise Start-Up Loans are offered to small businesses by conventional banks and alternative lenders and the money can be used for working capital, to pay any fee associated with starting up the franchise, to purchase equipment or to build stores or restaurants.

Now that you have got the basics covered, you are more informed and ready to make the decision of which type of loan and provider is right for you and your small business.

Why LoanOne?

Unlike other alternative lenders, LoanOne understands how Australian small businesses work and will provide small business owners with easy, fast funding solutions that will help your business grow.

The business loans from LoanOne are different to other, traditional business loans as the loans that we offer are flexible, paper-free and unnecessary extensive supporting documents are not required. We aim to help businesses who need loans fast!

LoanOne offers businesses:

  • A fast and easy online application and a timely loan approval.
  • The most secure technology that will ensure that any information that you submit online remains strictly confidential.
  • A friendly customer service experience via phone or email.
  • No hidden fees! We have competitive fees that are consistent with financial industry standards and are completely transparent.

With LoanOne, get fast, simple and safe loans!
Fill in our 5 minute online application today!

Top 8 Things You Should Know Before Applying for a Personal Loan


Sometimes situations can arise that are beyond our control and you may require an urgent capital injection. This could involve getting some emergency work done on your car or an unexpected bill pops up. Or you might want to renovate your house, purchase something important or go on a family vacation. But what happens when you don’t have the cash? That’s where a personal loan can help you out. When applying for a personal loan, it’s important that you choose a loan that is right for you. Let’s have a look at a checklist now of the top 8 things to consider for a personal loan.


1. What is a personal loan?

A personal loan is a lump sum of money that is borrowed from a lending institution. Personal loans have a predetermined time frame in which to pay the money back. This usually ranges anywhere from one to five years. Personal loans usually always have a fixed interest rate but this isn’t always the case.

Personal loans usually come in two different forms – secured and unsecured. Secured loans require the backing of collateral. This usually comes in the form of an asset such as a vehicle or property. This means that if you are unable to repay your loan for whatever reason, your lender has the right to seize your asset.

The main advantage of a secured loan is that the interest rate is generally quite low because you have an asset as collateral. This reduces the risk for the lender which is why they are able to pass on a lower interest rate to the borrower.

However, with an unsecured loan, there is no asset to use as collateral against the loan. Therefore, the lender will charge a higher interest rate in order to offset the risk of not having collateral. The loan term with an unsecured loan tends to also be shorter than that of a secured loan. In certain cases, you may not have the ability to qualify for a secured loan if you don’t have any assets to use as collateral. Therefore, you will have no choice but to apply for an unsecured loan.


2. Creditworthiness

All financial institutions will check your credit rating as part of the personal loan application process. If you do have a good credit standing, this may actually help you to obtain lower rates as you may be considered less of a risk to the lender. However, also be mindful of trying to apply for too many loans as this can also show up on your credit history and work against you.

If you do have a weak credit history, there are a number of financial institutions that will still consider you. Even if you have been bankrupt, some lending institutions will still actually provide you personal loans under certain terms and conditions.


3. Check the marketplace for lenders.

These days, there are many options available in which to secure personal loans aside from banks. There are a number of financial institutions offering short term and medium term personal loans. Even if you have been banking with the same bank for a number of years, that doesn’t necessarily mean that they will be offering the best rate.

It is important that you check the marketplace to see which lending institutions are offering the most competitive rates. There are a number of credit unions that can also offer you more competitive interest rates than most banks. You can now also find a number of online providers that offer personal loans that are competitive, but also very quick and convenient to apply for.

Peer to peer loans have also become a popular alternative to banks. This is an online platform in which potential borrowers and potential lenders are matched with each other. You are able to apply for both secured and unsecured loans with this platform. You can learn more by clicking here.


4. Term of the loan

Personal loans come with different loan terms. There are short term, medium term or even a long term loans such as a mortgage. With short term and medium term personal loans, you usually need to repay the money within a specific time frame. This is usually between 1 to 5 years. However, with a mortgage, this is usually payable over 20 years or more.

One of the most important considerations is the term of the loan. It is important to understand that the longer the loan term, the more interest you will pay over time. Therefore, the interest rate isn’t the only thing you need to consider. Taking the term of the loan into consideration is just as important as the interest rate.


5. Check that the credit provider is licensed.

All credit providers and lending institutions in Australia, including brokers, must be licensed by ASIC or at least be an authorised representative of an organisation that is licensed by ASIC. If you’re still not sure you can read more here.

There are a lot of scammers out there, so it’s important to make sure that you do not become seduced by somebody offering low interest rates. If you receive unsolicited contact from people offering financial products, please be very wary. Make sure you check their credentials and licenses before giving away any personal information.


6. Check the interest rate fees and charges.

Aside from the interest on your personal loan, there are also fees and charges that you need to consider. In Australia, from 1 July 2013, the fees and charges that financial institutions are permitted to charge on personal loans of more than $2,000 have been capped at a maximum amount. This means that for medium term loans, for amounts of $2001 and up to $5000, there is a one-off fee of $400. This also applies if the loan term is between 16 days and 2 years. A maximum annual interest rate of up 48% are also permitted.

If the loan amount is greater than $5000, and the term is longer than 2 years, the fees and charges cannot be higher than 48% annually. This also includes any other fixed fees or establishment fees that might be charged as above.

You also need to make sure you understand the costs involved if you were to payout your loan early. Some lending institutions actually charge a penalty if you were to pay off your loan early. So it’s important to make sure you know what these fees and charges are also. Hidden fees and charges could end up costing you a lot of money over the term of the loan.


7. Read your contract carefully.

This may seem obvious, but particularly when people are borrowing money for an emergency, and need the money quickly, they can sometimes overlook the terms and conditions of the credit contract. It is very important that you make sure the credit contract clearly states the amount you have borrowed, the interest rate (including the fees and charges), the term of the loan and how much the payments are, along with the due dates for those repayments. It is very important to make sure that all these items are included before you sign the final credit contract.

ALSO READ: LoanOne: Things You Should Know About Your Proposed Credit Contract


8. Paying your loan off sooner

No one likes being in debt, so the sooner you can pay your loan off the less interest you will pay. Conversely, if you do have any troubles repaying the loan, most credit providers are able to provide solutions if you communicate to them at the first sign of any trouble. Sometimes the unpredictable can happen along the way, but most lending institutions are able to assist you if something should happen during the term of your loan. However, if possible, you want to pay the loan off as soon as you can.