Guide to taking out a Personal Loans

taking a personal loan

If you are looking to apply for a personal loan but want to know more, then this guide will help you to find out how they work and how you can apply.

Whether you are wanting to take out a personal loan put a down payment on your new car, to pay for that much needed holiday or simply because your big day has just been announced, there are so many personal loans and lenders to choose from. This guide will help you to choose the right one for your needs and circumstances.

How do personal loans work?

Personal loans work is a similar way to any other type of loan. Put simply, you borrow an amount of money from either a bank or an alternative lender in order to pay for the things that you need to, whether that is for leisure or for daily expenses that you have fallen short on. The terms and agreement from the lender will determine if you pay this loan back in either monthly, fortnightly or weekly payments.

A personal loan will typically assist you in filing either a short-term or long-term demand for financial assistance. Once you have applied for a loan, the lender will then assess your suitability of the loan based on the guidelines they have in place, and if you are successful in your application, the lender will then send you the funds.
The repayments that you make on the loan will include the total amount of the loan, along with any fee and interest.


Determining the right personal loan for your situation is the first step of the process, however, this is not a straightforward as picking the first lender and the first loan terms that you stumble across. You must first choose the type of personal loan that you wish you opt for.

The two main types of personal loans are secured loans and unsecured loans.

  • Secured Loans: Secured Personal Loans are ones that you are required to attach an asset as collateral such as your home or vehicle. This is used as security for the repayment of the loan that must be forfeited in the event that you do not make repayments on the loan.
  • Generally, secured loans have a lower risk for lenders and therefore the rates they offer are lower.

  • Unsecured Loans: If you wish to obtain funds from a lender without expending your assets as collateral, you may wish to consider an unsecured loan. As the risk associated with offering a loan for lenders is much greater as they cannot claim any assets to recover for their losses, the interest rates that they offer with these loans are often higher. However, with this, you are able to have greater flexibility in the way in which you use your loan.

After you have determined the type of personal loan that meets your requirements and you wish you begin the application process, here are the ways in which you can compare the various personal loan offers from lenders:

  • The loan amount: What is the minimum and maximum amount that your choice of lenders allows you to apply for and is it enough to finance your needs?
  • The loan terms: What are the minimum and maximum loan terms? Loan terms can vary greatly between 1 and 7 years, however, this will depend on the lender and their guidelines.
  • The fees: Inquire about the upfront fees that you will be required to pay such as an application or sign up fees, along with any ongoing fees such as monthly or annual fees. These fees will be included in the amount of your loan.
  • The interest rates: Check if the interest rate is fixed or variable.
  • The repayments: Assess if you are able to select from either weekly, fortnightly or monthly repayments. It is also advised that you see if you can make additional repayments without incurring an additional fee or if you can repay the loan before the term ends without incurring a penalty.



Lenders have a set of guidelines that are put in place for personal loan eligibility. This can include, but is not limited to any of the following as each lender will have their own criteria:

  • Age: In order to apply for a loan in Australia you must be over 18 years of age. However, some lenders require applicants to be over 21 years of age.
  • Income: Some lenders require that you earn over a set amount in order to be eligible for a loan.
  • Employment: Most lenders require applicants to be employed, however, there are some that will consider and assess unemployed applicants.
  • Residency: For most lenders, you must either be an Australian citizen or be a permanent resident to be eligible, however, there are some lenders that may consider temporary residents.

It is important to note even if you meet the requirements for a loan that has been set out by the lender, you will not be approved for the loan unless you have provided proof that you can afford to make the repayments. Lenders will determine this by assessing your income, cash flow, previous and any outstanding debts and the stability of your employment.


Each lender will have varying application process, however, there is a list of documents of information that you will be required to provide, and may include any number of the following:
You will need to provide identification in the form of either a driver’s license, passport or another mode of photo ID.

You must also provide proof of income. Depending on the lender, you will be required to provide payslips from the last 3-6 months, bank statements, and if you are self employed, at least 2 years of tax returns.
Other relevant financial documents. If you have any other outstanding debts, you will need to provide the statements on these accounts.


Depending on the lender, you will either be given an answer on approval on the same day, while it may take up to a few days for other lenders. Generally, there are two types of approval.

The first is conditional approval. This type of approval usually takes a shorter amount of time however, it is only given on the condition that you offer more information. This may include additional payslips or other documents that are related to either your assets or outstanding debts. These conditions are in place for the lender to make more informed decisions on lending.

The next is full approval. This is given when you have offered enough information to the lender to make the decision to lend you finances and has approved your loan application.


Many lenders will allow you to select your repayment structure whether that is weekly, fortnightly or monthly repayments. Typically, the more often that you make repayments on the loan, the less interest you will incur.

The LoanOne Difference

LoanOne personal loans are one the safest and fastest ways in Australia to secure a personal loan. Whether you need the money to put a down payment on your new car, you have run into a family emergency or you simply need the money to stay on top of your daily living expenses, LoanOne personal loans are your fast, hassle-free and secure way to getting your hands on some quick money.

With LoanOne, you can apply for personal loan amounts from $2,100 to $8,000 with 12 month terms and the best part is that the application process won’t take you longer than 5 minutes.

With LoanOne, get fast, simple and safe loans!
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