How to Get Online Bad Credit Loans in Australia

A below-average credit score may not reflect your current situation but results from some previous actions and irresponsible financial behaviour. As such, it can be a challenge when applying for loans online.

But that doesn’t mean you’re without chances. You can still borrow money, as some lenders will gladly work with you even when banks and traditional financial institutions turn you down. You just have to know where to look and choose online bad credit loans in Australia that suit your need and capability.

What this article covers:

How to Apply for Bad Credit Loans in Australia Online

Being rejected for a loan is not a reason to give up on your goals. Be patient and start looking for loans that can help you with your financial issues by following these simple steps:

  1. Know how much you need
  2. Find online lending providers who work with bad credit borrowers
  3. Check loan offers and compare them
  4. Check their eligibility criteria
  5. Get pre-approval
  6. Apply for the loan

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Know Your Needs

Before deciding on borrowing money, you must look at your financial situation and the relatively limited possibilities due to your bad credit score. If there’s no other way to get cash, then online bad credit loans can be a lifesaver.

Next, determine how much money you need and what for. Lenders who work with bad credit borrowers offer different types of loans, so you can apply for car loans, debt consolidation loans, or whatever you need. 

If you need smaller amounts, you can ask for a $1,000 loan for poor credit borrowers. For more money, you can apply for bad credit personal loans, which can go up to thousands of dollars.

Find a Lender

Look for lenders who offer payday or online cash advance loans for borrowers with low credit scores.

You also have to check the lender’s reputation and track record, so as the quality and availability of its service and customer support. If you need money fast, you’ll be looking for lending providers who have online loans with instant approval in Australia.

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Compare Loan Offers

Now that you’ve shortlisted lenders, you must check their financial services. Remember that financial arrangements for bad credit borrowers aren’t cheap, but you can always look around for the most favourable deals.

Here are some factors to consider when choosing a bad credit loan:

  • Loan type: they can be secured or unsecured, depending on how much money you need and the lender’s risk assessment of your borrowing capability.
  • Interest: Lenders usually set higher interest rates for these arrangements.
  • Fees: Fees are something you pay whenever you borrow money, but when you’re a non-ideal borrower, these costs can be higher than usual.
  • Repayment period: The repayment period will depend on the loan amount and your financial circumstances.
  • Other lending terms: You should also pay attention to lenders’ options when it comes to loan refinancing, early closing, or failing to repay it on time.

Eligibility Criteria

Lenders who provide online bad credit loans in Australia have less strict requirements than traditional lenders. They have complete freedom in determining these criteria, but there are some general parameters all borrowers should meet:

  • You’re 18 or older
  • You have a permanent residence or citizenship in Australia
  • You have a regular income stream from employment, self-employment, pension, or government benefits (these should be less than 50% of your income)
  • Many lenders set minimal requirements for your annual gross income
  • You shouldn’t declare bankruptcy in the last 12 months

As for your credit score, it’s not of the greatest importance. Lenders will check it, but they’ll assess your application to determine your current financial situation and willingness to work on your credit score.

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Get Pre-Approval for Bad Credit Loans

Before you officially apply, you can submit a request for pre-approval. You find the form on the lender’s website, then provide some basic information and how much money you need.

This action takes no more than a couple of minutes, and the lender’s agents usually come back to you soon. They might ask for clarification or additional information and discuss your circumstances to find an affordable loan for you.

Many lenders provide pre-approval free of charge to help you evaluate your options and find online cash loans that suit you best. That can prevent you from being turned down for asking for more money than you can afford.

Apply for Bad Credit Loans Online

Being pre-approved for the loan gives you more chances of formal loan approval so that you can proceed with the application. You’ll be asked to submit documentation in a digital form, which greatly speeds up response time.

Your application should be backed up with the following:

  • ID document
  • Proof of residence
  • Proof of income 
  • Bank reports for the last three months

The lender providing bad credit loans needs these documents to check your finances and ability to afford the loan. That’s not a hard inquiry and doesn’t affect your credit score. After reviewing your employment, income, and tax records, lenders get back to you. 

After the approval, you sign the contract electronically and receive money. If you opted for online loans with same-day cash, the funds would be in your account in a few hours. 

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Costs of Online Bad Credit Loans

Loan costs are the deciding factor when choosing bad credit loans online. Because you have a below-average credit score, expect to pay higher interest and fees than borrowers with good or excellent credit scores. These costs can vary from lender to lender.

The costs of online bad credit loans depend on whether you’ve decided on personal or payday loans with fast online loan approval. The first one can be more favourable, but you might struggle to get approved. The latter carry less strict eligibility criteria but with relatively high interest.

A small loan carries no interest (for loans up to $2,000), but lenders charge origination and monthly fees. 

For bad credit borrowers, these can be up to 20% and 4%, respectively. Some lenders might only charge a flat establishment fee of several hundred dollars for bad credit borrowers.

So for a $1,000 loan and three month repayment period, you’ll repay:

$1,000 (principal) + $200 (origination fee) + $120 (monthly fee for three months) = $1,320

Your monthly instalment will be $440, or $220 if you decide on paying fortnightly.

If you need to borrow more than $2,000, be ready to pay interest up to 48% annually. Some lenders might charge an application fee for loans with a repayment period of up to two years.

For arrangements with longer tenures, you’ll only pay interest. These costs can be lower if you provide some security against the loan.

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Tips on Improving Bad Credit Score

Once you find affordable bad credit loans to apply online, you can get them as a quick fix. But as a long-term solution, it’s always better to work on your credit score so that you can apply for more favourable loans in future.

You can start working on your credit score by performing positive actions like:

  • Pay your debts on time
  • Don’t make unnecessary expenses
  • Keep your credit card utilisation rate low
  • Don’t apply for too many loans at the same time
  • Increase your income

To Sum Up

If you find yourself in a tricky financial situation, online bad credit loans in Australia can help you get out of it. 

However, you must borrow responsibly and use these loans only when necessary. They can carry relatively high costs, but when your options are limited and you need cash urgently, they’re better than nothing.

Follow the guidelines, and you’ll be able to get your loan in no time.

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