Bad Credit Unsecured Personal Loans With Very Fast Approval in Australia

If you’ve got bad credit, you probably know by now how hard it can be to borrow some money. Unfortunately, no matter how desperate you are, most financial establishments won’t consider you for a loan due to your bad credit history. 

But don’t lose hope. You can still find some lenders who offer unsecured personal loans with very fast approval for bad credit clients. So, if you’re interested in finding out more about this type of loan, take a look down below. 

What this article covers:

What’s an Unsecured Personal Loan?

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In a nutshell, an unsecured personal loan allows you to borrow money without placing a valuable asset as collateral. 

Now, this type of loan can be quite risky for the lender as they have no way of taking back his money if you ever default on the loan. Accordingly, lenders have come up with ways to decrease said risk. 

For instance, unsecured loans tend to be for small amounts, rarely bypassing the $5000 mark. Moreover, they have higher interest rates and shorter loan terms. 

Nevertheless, unsecured loans aren’t too hard to repay, which explains their popularity among borrowers. And honestly, they’re the perfect and only option for people who don’t own a valuable asset to pawn.  

Can People With Bad Credit Get an Unsecured Personal Loan?

You’d think the answer would be a definite no, but that’s far from the truth.

Ordinarily, banks and other financial establishments don’t give out loans to bad credit clients. That’s because bad credit implies that you’re a high-risk client.

Why? Well, your credit history reflects your past dealing with money. If you’ve regularly fallen back or missed your credit card or loan payments, your credit score will drop. The same will happen if you take out too many loans and default on them. 

So, when banks see a low credit score, they deem you unreliable to make good on a loan. That’s why they’ll refuse to give you one, secured or unsecured, from the get-go. 

However, that’s not always the case with private money lenders. 

Some lenders will still consider you for a loan, no matter how bad your credit is because they believe everyone should get a fair chance. 

Nevertheless, you can’t deny the risk they’re taking by loaning you the money. Not only is the loan unsecured, but your credit history isn’t exactly promising. 

So, expect the loans to have higher-than-average fees and interest rates. Nothing too ridiculous, mind you, just slightly higher. So, as long as you’re alright with these, you’ll be able to find plenty of lenders willing to work with you. 

How Long Does It Take to Get Approved for a Bad Credit Unsecured Personal Loan?

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Thankfully, not long at all. 

The most time-consuming part of any loan is the credit check itself. Not only does the lender have to run a credit check on you, but they also need to determine your debt-to-income ratio, check your employment, and more. If you’re taking out a secured loan, they’ll also need to check the asset and make sure it’s in your name. 

However, with bad credit loans, the process isn’t quite so long. Once the lender receives your loan application, they’ll quickly review it and check your details. If there aren’t any issues, you’ll be able to get your money in a day or so. 

Pros and Cons of Bad Credit Unsecured Personal Loans

As with anything, an unsecured loan for bad credit isn’t all good or all bad. So, let’s take a look at its benefits and drawbacks. That way, you can decide if this loan is the right fit for you. 

Pros 

  • Speedy approval: Since the lender only needs to review your application and verify your details,  you should be able to get the loan only after a day or two. 
  • Almost anyone can get them: Whether your credit score is fair, poor, or very poor, you can almost guarantee to get approved for a bad credit unsecured loan. 
  • No collateral needed: An unsecured loan allows you to get money without risking a valuable item.
  • Improves your credit score over time: If you make all your payments on time and fully repay the loan, your credit score will improve. 

Cons 

  • Higher fees and interest rates: Since the lender needs to counteract your bad credit and the lack of security, your loan fees will be slightly higher than usual.
  • Shorter loan terms: The loan needs to be paid off in a shorter time. Again, this is to minimize the risk.

How Much Will You Pay for an Unsecured Loan for Bad Credit?

This will depend on how much money you borrow. 

For instance, say you’re borrowing $2000 or less. This would be considered a small loan. And according to the Australian Securities & Investments Commission (ASIC), lenders can’t assign an interest rate to small loans. At most, they can only charge you a 20% establishment fee and a 4% monthly fee. 

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So, if you’re borrowing $1000 to be repaid in 1 month, you’ll end up paying:

  • Establishment fee: $200
  • Monthly fee: $40
  • Total: $1240

Now, larger loans, in the range of $2001 and $5000, will come with an interest rate. Generally, interest rates will be around 5.99% per annum, though some lenders may hike it up to 7% or 8%.

Also, expect to pay an establishment fee. Depending on the lender, it can be as low as $100 or as high as $700.

As you can see, a large unsecured loan can cost quite a bit, especially if you choose a longer loan term. That’s because the more time passes, the more interest you’ll have to pay. 

So, only borrow as much as you need and make your payments on time. That way, your credit score won’t take a beating, and you’ll be able to avoid hidden charges like late payment fees.

Note: Late payment fees can be as high as $7 per day. Also, default fees can be twice as much as the original loan amount.

Which Is Better: Secured or Unsecured Loans?

Each loan has its perks.

For instance, unsecured loans are quick to acquire. Since the lender doesn’t have to check your asset and assess its worth, you can get an unsecured loan in a couple of days. 

Secured loans, however, have the benefit of being cheaper. Since the lender has a sure way to make back his money in case you default, they’ll give you more favourable terms. For example, your interest rate will be lower, or your loan term can be longer. 

So, ultimately, it comes down to what’s more important to you. Do you need money urgently, or are you willing to wait a bit for a reasonable interest rate? Are you ready to risk your valuable possession to get better terms, or is this not an option?

Think about what you want, and choose the type of loan that suits you better. 

What Do You Need for an Unsecured Personal Loan?

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You don’t need to do much to get an unsecured personal loan in Australia.

Simply submit an online application for the loan, stating in it the amount you need and your preferred loan terms. Then enclose the following:

  • A copy of your ID or driver’s license 
  • Your personal information, such as your email, address, and phone number
  • Employment details 
  • Proof of income (payslip or bank statement)
  • 90-day history of your bank transactions

Once the lender reviews your application, they’ll give you a call to confirm your details, and send you the loan contract to sign, and once you do, the money will be deposited in your bank account after a few hours. 

What are the Eligibility Criteria for an Unsecured Personal Loan?

To get an unsecured personal loan in Australia, you need to:

  • Be over 18 years of age
  • Be an Australian citizen or a permanent resident of Australia
  • Have an active bank account, email, and phone number
  • Be earning a regular income for at least the last three months (at least $30,000 per year)

Absolutely. Being on government support doesn’t automatically exclude you from getting a loan. In fact, you’ll find many lenders who don’t mind dealing with clients on Centrelink benefits. 

However, this doesn’t apply to all lenders. Some refuse to lend money to Centrelink recipients, especially if all or most of their income is based on those payments. 

Couple this with bad credit, and they’ll be even less willing to work with you. 

Nevertheless, you can find lenders who will accept Centrelink recipients. As long as they deem you willing and capable of repaying the loan, they’ll be more than happy to loan you the money.

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What Should You Do If You’re Struggling to Repay the Loan?

If a loan payment is due and you can’t come up with the money, the first thing you should do is contact your lender.

Explain your situation to them, telling them why you won’t be able to make your payment this time. Generally, your lender will understand and take your circumstances into account. 

They may try to make it a bit easier on you, like giving you an extension or decreasing your payment for this month, with the rest to be repaid later. They may help you refinance your loan so you can have loan terms more suitable to your current situation. At the very least, they may cancel your late payment fees. 

Still, remember that not all lenders will be quite so understanding. Some will simply give you a warning; then, the financial and legal repercussions will appear. 

Are There Alternatives to Bad Credit Unsecured Personal Loans?

If you’ve got bad credit but you’re not looking to borrow too much money, unsecured personal loans aren’t your only option. So, let’s see what your alternatives are, shall we?

No-Interest Loan Scheme 

The No-Interest Loan Scheme (NILS) allows low-income Australians to borrow amounts of up to $1500-$2000 for absolutely no interest or fees. And since NILS doesn’t require credit checks, people with bad credit can apply freely. 

Still, keep in mind that you must use the loan money to pay for essentials, such as household items, medical bills, or car repairs, to name a few. Anything outside the needs and you won’t be qualified for the loan.

You must also provide proof that you’ve been living at the same address for at least three months and have either a Health Care Card or a Pensioner Concession Card. If you have neither, you need to prove that you make less than $45,000 a year after tax deductions. 

Centrelink Advance Payment

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If you’re on government support, you can ask for an advance on your Centrelink payment. Any Centrelink recipient can apply, bad credit or not, and again, there are no fees or interest rates. 

All you need to do is apply for the advance on the Service Australia website, and the money will be automatically taken out of your future Centrelink payments. 

Payday Loan

Payday loans, previously known as small-amount loans, are similar to personal loans. However, they tend to be for smaller amounts and are repaid in a shorter time frame. 

The good thing about a payday loan is that anyone can get it. Lenders generally never check their client’s credit scores, so all applicants are accepted. 

On the flip side, payday loans tend to have higher fees (though this shouldn’t concern you unless you’re borrowing more than $2000). And since they’re rarely reported to credit bureaus, paying them back won’t affect your credit score in the slightest.

Still, they’re a good option for people with bad or insufficient credit history. So, keep them in mind if you ever have trouble getting a personal loan.

Conclusion

If you’ve got bad credit and want to take out an unsecured personal loan, rejoice. 

On Orange Loans, we can connect you to numerous lenders in Australia with fast approval rates. Simply submit your online application, and we’ll do the rest. 

Just keep in mind that you’ll be hard-pressed to find a lender willing to loan you a dollar over $5000. So, if you need more money, you’ll be better off applying for a secured personal loan.

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