How to Get Second-Chance Loans in Australia

Having a low credit standing can be a challenge if you’re looking to apply for a new loan. Most lenders with low-interest fees will skip your loan application the moment they see your credit history unless they accept collateral.

However, there are second-chance loans that can help you. They’ll aid you in getting another chance to build your credit but with a price: high-interest rates.

In this article, we’ll talk about how these loan works, the steps in getting one, and some reminders before you apply for it.

What this article covers:

How a Second-Chance Loan Works

In Australia, non-traditional lenders, such as credit unions, finance companies, and online lenders, can offer second-chance loans. It can either be a long or short-term loan. These lenders are more lenient regarding credit history and willing to take on higher-risk borrowers.

To apply for this loan, you will need to provide the following:

  • 100-Point Identification
  • Contact Information
  • myGov account (if applicable)
  • Proof of income and employment
  • Details of any outstanding debts or credit issues

The lender will then assess your application and determine your eligibility for the loan.

They might be able to offer you another type of loan as well, such as low-income loans.

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Steps in Getting Second-Chance Loans in Australia

Follow these simplified steps to get last-chance loans in Australia.

1. Look for Second-Chance Loan Lenders

When looking for reliable and credible lenders, ensure that ASIC regulates them. They should have an Australian financial services (AFS) licence to operate.

It’s also worth looking for certifications. It’s a testament to their performance and conduct in the lending industry.

If you don’t know where to start, rely on loan finders such as Orange Loans. All you need to do is submit some prerequisite requirements, and they’ll pair you up with the most fitting second lender who offers second-chance loans with guaranteed approval in Australia.

2. Collect the Requirements

Once you found the right lender for your needs or have been paired with one, if you resorted to loan finders, visit their website and read what documents they’ll need from you.

Some lenders might require collateral documents if you apply for a secured loan.

However, most can offer you 2nd-chance loans without attaching collateral but in exchange for high-interest rates.

3. Apply for the Loan

Ensure that you have all the requirements to guarantee a smooth application process. 

Most lenders already have an embedded online application form on their websites, making it easier to fill out everything. 

However, some might still have the downloadable PDF form. They’ll require you to use a PDF editor to key in the necessary fields and submit it as an attachment with your requirements via email. 

So, whatever kind of loan you’re applying for, even loans for casual workers, you’ll get either the embedded online form or downloadable PDF form.

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4. Review the Terms and Conditions

Before submitting your application, understand the imposed interest fees and other charges. 

Make sure there are no hidden charges as well to avoid inconveniences. If there are, double-check whether or not it’s agreeable.

Ensure all fees and other charges are within ASIC’s regulations. 

Remember, any kind of loan, even if they’re loans for 18-year-olds, so long as they’re less than $2,000, should only have the following:

  • One establishment fee not exceeding 20% of the loan amount
  • One monthly account-keeping fee not exceeding 4% of the loan amount
  • One government charge
  • Default fees and other charges
  • Enforcement expenses

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5. Wait for Approval and Disbursement

Once you’ve submitted your loan application already, wait for the approval. It’ll usually take from 3-5 business days. However, some might approve and disburse it earlier.

You might also be interested in loans for self-employed.

Reminders Before Getting These Types of Loans

Remember the following factors when applying for a second-chance loan:

  • High-Interest Rates. You’ll see most second-chance loans in the subprime market, meaning every lender you’ll encounter will likely have a high-interest rate due to your bad credit standing.
  • Double-Check With Traditional Loans. Ensure you can’t apply for a traditional loan before resorting to second-chance cash loans. It’s because most traditional loans have low-interest fees.

Conclusion

Getting a second-chance loan can be challenging, but it’s not impossible. Ensure you’re paired with the right lender who can offer you the best deals. Don’t forget to be conscious of the imposed interest fees and other charges.

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