Understanding how personal loans work with lenders can be a little tricky, however there are a few things you should know before applying for one.
What is a personal loan?
A personal loan is an unsecured loan product where you can use the funds for any worthwhile purpose. Like any loan, you will be required to pay the loan back with fixed monthly, fortnightly or weekly repayments over a set loan term.
There are a few options when it comes to getting a personal loan including a secured personal loan (where a car, motorbike that you own is used) or a fully unsecured personal loan.
What is the personal loan term?
- Personal Bicycle Loan terms generally range from 1-7 years.
- An unseucred personal loan can be paid out before 12 months, however some lenders may charge an early exit fee to do so.
- If you’re purchasing a new, used or second-hand bicycle the loan term can be adjusted to suit your requirements and budget.
- You need to keep in mind, the longer the loan term, the lower the repayment but the more interest you will pay.
What are the benefits of a personal loan?
Personal Loans are flexible loan products that can be adjusted to suit your requirements and budget at the time. Being a fully unsecured product, there is a higher risk to the lender as they are providing you the funds with the view that it will be paid back in full and on time.
Personal Loans can provide benefits including:
- No monthly account keeping fees
- No early repayment fee
- No or low setup fee
- Interest rate is fixed for the term
- Ability to make additional or extra repayments without penalty.
Ensure your credit rating & score is high
A higher credit score will provide a better answer with lenders. Your credit score can be accessed through Equifax who provide a free credit report. Your credit score is fluid and varies from month to month based on the information provided by your current financiers over you repayment history. If you miss a credit card payment, this will reflect on your credit score. A good credit history with other banks, whether it be a car loan, personal loan or home loan helps personal loan lenders with they’re answers.
Make sure you have enough income to cover costs
Whether your working full time, self employed or receiving Centrelink, make sure to take into consideration the new loan repayment in your budget and leave a buffer or emergency fund for unexpected expenses that may arise.
Maintain a good credit history by paying off your debts on time
As in the paragraph above, your credit activity, whether a credit card, personal loan, buy now pay later or payday lender is kept on file by credit agencies for up to 5 years. This information includes your loan details, repayments and overdue accounts. Maintining a good repayment history and not having an active credit file (too many enquiries) will help in maintaining a good credit history.
Can I get a personal loan if I have a bad credit history?
While bad credit, defaults or late payment history may decrease the range of options available to you, it doesn’t mean you can’t get a loan at all.
Get in touch with one of our BikePay loan specialists to find out how we can help you.