Australians have a $145.5 billion amount of outstanding personal loan as of September 2020. According to a survey conducted in the Northern Territory, 32% of people plan to take a personal loan out in the next six months. The numbers indicate that Australians have been taking out loans for ages, and they will continue to do so.

If you are looking for a competitive and flexible finance product, you can explore alex.bank – personal loans in the digital banking space.

Before you jump into the application process, the article brings questions that could help you better understand the finance product you will be using.

Questions to Ask Before Applying for a Personal Loan

What Can One Use a Personal Loan For?

One can use a personal loan for various reasons. The idea behind the loan is to make money available to you at an interest rate, using which you can fulfill tasks that matter. For example, home improvement projects are one of the significant reasons why Australians take out personal loans.

You can use the loan to buy your first car or fund the vacation of your dreams. In addition, if you have different debts with varying interest rates and repayment terms, you can streamline them into a single debt consolidation loan. 

Who Can Apply for a Personal Loan? 

Specific requirements may vary from one lender to another. Still, the standard pre-requisites for a personal loan are that the applicant must be over the age of 18 years and an Australian citizen or permanent resident. One should also have a regular source of income and should never have been bankrupt. 

What is the Interest Rate Offered? 

The interest rate for the loan significantly varies from one financial institution to another. The average variable interest rate as of January 2020 was 14.41%. Some banks might offer fixed interest rates, whereas others may provide personalized interest rates.

For example, if you apply for alex.bank – personal loans, the fixed and comparison interest rate starts from 4.99%. Your personalized interest rate will be determined considering your credit history and current financial position.  

What are Different Types of Fees Associated with Personal Loan? 

When applying for a personal loan, you would have to pay a slew of fees like:

  • Establishment fee
  • Monthly fee
  • Ongoing annual fee
  • Missed payment fee
  • Early payout fee
  • Other administrative fees

You should know that these different types of fees will be levied and how much will depend on the lender. For example, some lenders will not charge you any ongoing or recurring monthly and annual fees.  

What is the Personal Loan Application Process? 

The advantage of working with a digital bank is that you can fill up the application and upload required documents online. In addition, ID verification, credit check, application approval, and funds transfer will also be done online by the bank.

You might have to fill in physical forms and visit the branch with your documents in a traditional banking setup. NUt if you choose a digital bank, the process can be done online. 

What is the Loan Repayment Frequency? 

If your loan is approved, how often will you have to make payments to the bank? Depending on the lender, you can make weekly, fortnight, and monthly payments.

Banks offer loan calculators online, which you can use to get a cohesive view of the personal loan repayment terms. For example, you can estimate the amount you will have to pay according to the repayment frequency you choose.   

Will an Early Payout Fee Be Charged? 

An early payout fee is an amount you will be charged if you pay off the debt earlier than the agreed period. For example, if your repayment period is 36 months and you complete repayment in 33 months, you could be penalized.

Get a personal loan from a bank that does not charge you this fee. You should have the freedom to pay out your balance early if possible. 

How Can You Contact Customer Service?

Who do you contact in case of any questions or concerns? Especially when it comes to a digital bank, you must have a customer support team available to assist you. Instead of chatbots, you need real humans to answer your queries.

Any bank should offer email, chat, and call assistance to its customers.

A personal loan can aid in fulfilling your dream of a remodeled home office, a new car, or a holiday. When applying for such loans, consider factors like interest rate, fees, and other repayment terms. You can choose to borrow from a digital bank and make the most of the flexible financial products offered.