There are many reasons for someone to get a loan; it could be for a new car, a house or an overseas vacation. No matter what you intend to use the loan for, you should find the best loan in Australia. The best loan does not only mean that you are offered a good amount of money,it also means that you are working with a reputable lender.
Many different financial institutions offer loans. These financial institutions include credit unions, online lenders, etc. There are many factors that you should consider before getting a loan. For instance, you should not forget to check the loan terms and conditions since they ultimately affect the total amount that you need to pay back.
You should note that the terms and conditions can vary from lender to lender. Researching before you apply for your loan can help you compare offers and get the best loan in Australia that is available to you.
Why You Need to Research
Not doing your research puts you at risk of paying more than you should. As mentioned previously, doing your research first allows you to compare multiple offers and choose the right loan and lender for your needs.
There are so many lenders and loan option nowadays and choosing the right one can be difficult. We want to help you make the right decisions, so read on if you want to find out how to choose the right lender and loan in Australia.
Where to Start When Looking for a Lender
Do not just take the first offer you get from a lender that you get in touch with. It is important to know your options and compare them comprehensively. Here are a few resources to help you find the right lender to get your loan in Australia:
You want to be working with a reputable lender when applying for a loan. Referrals by someone you know and trust can help you feel more comfortable with the process. For example, if your friend or your family member has worked with a lender they will know firsthand that their products and services are satisfactory. Again, this does not mean that you can just go with the first referral that you get—there may be better offers out there.
2. Current bank or Lender
You probably have an account with a bank, or maybe you already know a lender that you feel like you can trust. Since you have been with them for quite a while now, it is clear that you believe they are trustworthy. You can ask them about the types of loans they offer and see if their rates and terms are suitable for you. Keep in mind to take your time in deciding as there are many providers of loans in Australia.
3. Online research
The internet has made it easy for people to find what they need. This includes lenders and loan products. However, you may want to be extra careful when looking up your lenders online. It is up to you to decide which information you want to trust.
There are many online sources for information that you can use when deciding on the lender using internet searching. These online resources include:
- Company websites – Most companies have a website that contains their information, products and services. Depending on how transparent they are, you may be able to find the loan products they offer and their rates, terms, fees and more.
- Reliable online sources – Some websites contain information that helps their users learn more about financial products and services. These websites often also contain some comparisons of the offers from popular lenders. This allows you to learn about reliable lenders and their offers without having to visit their individual websites one by one.
- Online reviews – One of the best ways to find out about a lender is through their customer reviews. You can visit review websites and read about the experiences that their previous customers had with them. However, you still need to manage your expectations because there is no guarantee that you will have a similar experience with the lender as their other clients.
Important Factors When Choosing a Loan in Australia
Take your time when deciding to get a loan as it is a big decision that will affect your finances for a long time. Aside from the lenders, you should also research and take note of information about loan products and the terms they come with.
Here are some loan criteria to consider when choosing a loan to apply for:
1. Interest rates
The factor that will have the greatest influence on how much you need to pay throughout your loan is the interest rate. You want to get the best rate possible for your loan and different lenders offer different interest rates. It will also depend on your creditworthiness and a host of other factors.
You should look at the fees that come with the total cost of your loans. Depending on your lender, you can find loans that do not have fees, but generally, a loan in Australia comes with one or more of the following:
- Origination fees- This is the fee for processing your loan application and disbursing the funds.
- Processing fees – This is the fee for processing your payment each month.
- Prepayment penalties – This is a charge for paying off your balance earlier than your agreed term.
- Late payment fees – As the name suggests, this is a fee for making late payments.
3. Total loan amount and repayment terms
The duration of your loan depends on you and the lender. Generally, lenders offer their clients repayment terms of 12 to 84 months. Choosing a loan with a shorter term allows you to pay less interest overall, however, this means that you will be paying higher monthly loan payments. Conversely, if you choose a loan with a longer term, your monthly payment will be lower but you will pay more in interest throughout the life of your loan.
4. Availability of funding
Only you can tell how badly you need your funds and this might affect which lender or loan you will end up with. Some lenders can send you the funds within 24-48 hours while others may take as long as 10 business days.
5. Requirements for eligibility
Lenders review your credibility as a borrower. They will ask for some requirements to determine your credit risk. Here are a few that you should prepare:
- Credit score – This will help your lenders forecast your ability to repay a debt.
- Income – This will help lenders determine if you make enough money to repay your loan.
- Debt-to-Income ratio – This helps lenders determine if you have too much existing debt to get another loan.
Choosing a Lender for a Good Loan in Australia
Aside from their loan products, you also need to look at the following criteria when choosing a lender:
- Location- If you wish to speak to someone in person about your loan, you ideally want to choose a lender located near you.
- Reputation – You would want to work with a reputable lender for you to experience great customer service and business practices.
Different people have different needs. One lender may suit your friend’s demands but not cover your needs. Choose a lender that has the rates that you can afford and a service level you’re comfortable with.