How Does Getting A Personal Loan Work?

Are you looking to bridge the gap in funds for a holiday, special event, home renovations, or something else? A personal loan could be the best option for you to get funds quickly. Or, you might be looking to make repayments more centralised and easy to manage, which is where a personal debt consolidation comes in. No matter your motivation, the process doesn’t need to be intimidating or confusing! There are a few tasks you need to do before you apply, and things to keep in mind if you’re successful in your application. 

It’s a good idea to get to know how borrowing works before you start applying, so you don’t run into any surprises down the track.

So, here’s the basic rundown. 

You apply with a lender for a certain amount

Before getting into the application process, it’s a good idea to have a look at your financial situation. You’ll want to look over how much you have saved, how much you want to borrow, and then balance that out to see if you’ll be able to make repayments for the sum you’re asking for from a lender. Being able to showcase your financial situation to a lender is important, and going in with confidence that you’re asking for an amount you’re more likely to get approved for is a great start. 

Once you’ve settled on the amount you need for a trip, some work done on your home, or that dental procedure you’ve been meaning to get done, you’ll need some paperwork. You should be able to show things like identification details such as your name, address and date of birth, as well as things like bank statements, living expenses and payslips. 

A lot of this is automated now, so it’s a relatively fast and pain free process. You should also expect to tell the lender why you want the loan and how much you’d like to borrow. Be aware that based on your financial situation, the lender may offer you less than you asked for and, in some cases, more. When you’re going through the application process with Rapid, you’ll be able to consult with our friendly team who can give you additional context like repayment periods and interest rates too. 

Your credit score is checked

When you make a loan application, the lender will run a credit check. This will show your credit history and may impact how much you can borrow or your eligibility. Most lenders will run a credit check during the application process, so it’s best to avoid making too many enquiries at once as it can affect your credit score. Having a look at your credit score before you apply is quick, easy, and a good thing to do. It doesn’t take long and can be completed online before you get into the application process. Having an average score doesn’t necessarily mean you won’t get approved, but knowing all the information before you start will give you the context you need. 

You get a contract

Once all of your information has been reviewed, if you’re successful, you’ll then be made an offer by the lender, and to seal the deal you’ll need to sign a contract. This will contain a whole host of important details you need to check out, such as:  

• Loan amount
• Loan term
• Repayment amount and schedule
• Any fees and charges, including defaults and early pay-outs
• The interest rate

You’ll also see the total cost of credit, which is the amount you borrowed plus the amount of fees and interest you’ll pay over the life of the loan. This is how borrowing credit works – you enter into a contract with the lender to say that you’ll not only pay back the amount you borrowed on time but also the interest and fees it incurs over the agreed upon period. Secured loans, like those offered by Rapid, are borrowed against a registered asset like your car, so it’s important to keep on track with repayments. 

You get funds

Providing all goes well and you return your signed contract, your funds will be released into your nominated bank account, and your repayment schedule starts. If you want to pay an extra amount off early, you can do that too as your financial situation changes. 

You’re now on your way to kicking that goal with the help of a personal loan. Congrats! 

When life gives you lemons, or you just need a boost towards your goal, applying with Rapid Loans is faster than making lemonade. Apply online in minutes here.

Please note: This is purely an opinion piece and should not be used as a sole source of guidance. This is general advice only, and has not taken into account your financial objectives, needs or requirements. You should seek your own advice to determine if this product is right for you.