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*This comparison rate is based on an unsecured variable rate personal loan of $30,000 for a term of 5 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. $495 establishment fee and $10 monthly fee applies. Comparison as of: 06/06/2022

It’s hard to acquire a loan in Australia with bad credit history, but that doesn’t mean you’re not eligible for a loan. There are direct lenders who are willing to work with borrowers with bad credit. 

Is there such a thing as guaranteed approval on loans with bad credit, though? If so, is it legal? This is what this post attempts to address, so we urge you to stick around. 

Do Guaranteed Loan Approvals Exist?

There’s no such thing as guaranteed loan approval in Australia. It’s actually illegal, according to Australia’s National Consumer Credit Protection Act 2009. 

The rules stated in the act are intended to ensure responsible lending and to protect borrowers from the hardships of trying to repay loans that weren’t suitable for them in the first place. 

If you come across a lender that’s offering personal loans with guaranteed approval, it’s most likely a scam. Such lenders are likely to charge excessive fees and interest rates or they may have borrowers signing contracts with illegal or unfair terms and conditions. 

Legitimate lenders are required to carry out assessments on eligible applicants to ensure that they’re able to repay their loans. 

This basically means that if you submit a loan application, the lender is going to inquire about your financial situation and demand specific financial statements to ensure responsible direct lenders bad credit personal loans.

In order to know whether or not a lender is legitimate, you need to verify that they’re listed with the ASIC (Australian Securities and Investments Commission). 

If the lender is on the ASIC’s “do not deal with” list, then, obviously, you shouldn’t be dealing with that lender.

If you’re dealing with a lender and you suspect that you’re being scammed, you need to stop dealing with that lender and report to the ASIC. Click here to learn more.

How Do Bad Credit Loans Work?

Please bear in mind that loan providers who offer bad credit loans are still required to assess their applicants to ensure they’re able to repay their loans. So, don’t be expecting guaranteed approval. Loans are more likely if they are secured, such as with a no check truck loan.

Instead of basing their assessments on your credit history, however, such lenders analyze your current relationship with money as well as your employment and income. If you are likely unable to make repayment, such as with a $30000 loan with bad credit, a lender will be less inclined to offer such a loan.

If you’re not having trouble securing a consistent income through full-time, part-time, or even casual employment, your chances of securing a bad credit personal loan are high. 

Interest Rates

Bad credit loans are typically associated with higher fees and interest rates than loans provided to those in a prime borrowing position, i.e. those with a good credit history. 

Note that lenders who provide bad credit loans utilize risk-based pricing schemes to secure same day cash loans bad credit. In other words, the riskier the loan, the higher the interest rate. 

What Types of Bad Credit Loans Are Available?

Securing a loan with a bad credit history may be challenging, but it’s not at all impossible. There are lenders who are more than willing to work with borrowers with bad credit.

There are three finance options you can select from if you have bad credit, namely a short-term payday loan, unsecured loan, and secured loan. Let’s go over each type very briefly. 

Payday Loans

Payday loans, also referred to as short-term loans, range from $100 to $2,000. Such loans are often based on the borrower’s income and frequency of pay. 

The repayment terms of short-term loans range from 16 days to 12 months, and they’re also dependent on the borrower’s income. 

Payday loans come with regulated rates and fees. The vast majority come with a 20% establishment fee and a 4% monthly fee. Default and government fees may also be charged.

Secured Loans

Secured loans are the ones that require some sort of collateral, such as home equity or any other valuable asset. This is to protect the lender in case the borrower defaults on secured bad credit loans Australia. 

Secured loans can come with variable or fixed interest rates. Their associated fees and rates are considerably lower than their unsecured counterparts, though, due to collateral. 

As for term duration, secured loans come with repayment terms ranging up to five years. Secured loans can range up to $10,000.

Unsecured Loans

Unsecured loans are pretty much the same as secured loans, with the main difference being that the borrower doesn’t have to offer any of their assets as collateral. Apply today for same day cash loans bad credit with Perfect Payday.

Bear in mind, though, that unsecured loans come with interest rates and fees that are notably higher than the ones associated with their secured counterparts. So, make sure you’re able to repay the loan in term so that you don’t run the risk of penalties.

What Are the Eligibility Requirements for Personal Loans?

Eligibility requirements tend to differ from one lender to another. However, the vast majority of lenders have common eligibility criteria dictating that borrowers should be 18 years or older, permanent residents of Australia, and have a consistent income for the past three months. The same is true of motorbike loans bad credit (assuming you want to get a loan for a motorbike).

If you’re receiving Centrelink payments, you’re likely to find loan providers who are willing to accommodate your loan request as long as Centrelink payments aren’t your main source of income. This is typically for unsecured loans. On the other hand, if you’re getting something like boat loans bad credit, a boat will act as collateral so the loan will be secured.

If you’re unemployed, you may have a hard time finding a lender that’s willing to provide bad credit loan with monthly payments. You’ll have to provide proof that you’re able to repay the loan in time. 

If you’re a current or discharged bankrupt, or if you’re under a Part IX debt agreement, your chances of acquiring a loan are the slimmest. Still, you might be able to find a loan provider that’s willing to work with you.

Final Thoughts

Just because you have a bad credit history doesn’t mean it’s impossible for you to acquire a loan. There are loan providers all over Australia that offer bad credit loans. Some lenders offer no credit check loans, as well. If you need a loan for an emergency, such as getting a vehicle, you may qualify for a car loan with guaranteed approval.

Before applying for a bad credit or no credit check loan, make sure you’re well aware of the fees, interest, and terms of the agreement to ensure being able to repay the loan in time. Larger loans, such as a $5000 dollar loan, may require a credit check.

And lastly, like we already mentioned, there’s no such thing as guaranteed loan approvals. So, make sure you’re dealing with a legitimate lender that’s listed with the ASIC.

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