Personal loans can open doors to all kinds of exciting opportunities. You can take that dream trip, buy that car you've been eyeing, or finally re-do the kitchen.
But financing can be nerve-wracking. Are you making the right choice? How can you be sure of your budget?
One way to make your life a whole lot easier and less stressful is to apply for pre-approval. Here's what you need to know.
What Is pre-approval?
Pre-approval is a green light to start shopping from your lender. It's not a guarantee of a loan, but it gives you a really good idea of how much you'll be approved for and the interest rate.
It works like this: The lender will look at your application. They'll assess your financial situation, credit score, income, expenses, and so on. If everything looks good to them, you'll be pre-approved.
Expect a conditional letter from your lender that outlines the maximum amount you can borrow. This is usually valid for a set period of time, like 90 days.
Benefits of pre-approval for personal loans
Imagine finding your dream car, only to find out when you're knee-deep into the buying process that it's outside of your budget.
No, thanks. You want to steer clear of situations like this.
Pre-approval is the solution—here are just some of the benefits.
Greater Bank
Confidence in your budget
With pre-approval, you can make buying choices knowing that they fit within your budget. There's no risk of falling short.
Better negotiating power
Why not shave a few hundred—or even thousand—dollars off the purchasing price by negotiating? It's a common thing to do, especially when buying a car. And, if you've got your financing in order, the seller will be more likely to take your offer seriously. It can give you an edge against other interested buyers, too.
Faster loan approval
If you have pre-approval, the lender has already looked at your financial information. This can help speed up the car or personal loan approval process. This means no delays and less waiting around nervously for an answer.
Use cases for pre-approval
When might pre-approval for personal or car loans come in handy? Here are some use cases.
Car loans
Hitting the road
Interest Rate
5.99
%
p.a.
Comparison rate
6.37
%^
p.a.
Secured New Car Loan - Fixed rates for 1-7 years
If you’re shopping around for a new car, van, ute or 4WD, put your foot down and check out our New Car Loan.
Hitting the road
If you’re shopping around for a new car, van, ute or 4WD, put your foot down and check out our New Car Loan.
Don't waste your time on cars you can't afford. At the same time, don't miss your dream car because you think it's out of reach. With pre-approval, you can shop smarter and avoid the headache that comes from a last-minute loan rejection.
Home improvement
Home improvements can sometimes run over budget. Perhaps you've underestimated just how much you'd need to freshen up your place, or maybe you've decided last minute to opt for the larger in-ground pool. Protect your financial health with pre-approval. You'll know exactly how much you can spend.
Debt consolidation
Consolidation can make managing your debt a whole lot easier. Pre-approval gives you clarity on how to move forward. You can prioritise high-interest-rate debt and map out your financial strategy.
Dos and don'ts when seeking pre-approval
Pre-approval is hugely advantageous in the right situations. But there are still some important dos and don'ts to keep in mind.
Dos
- Do check your credit score and take steps to improve it if needed.
- Do compare lenders to find the best interest rates and loan terms for you.
- Do provide accurate information.
Don'ts
- Don't apply for pre-approval with multiple lenders all at the same time.
- Don't overestimate your budget.
- Don't forget the validity period.
Get pre-approved for a Personal Loan
Whatever big ticket purchase you've got your eye on, pre-approval can be a smart move toward turning dreams into a reality. It helps you avoid stress, set a realistic budget, and achieve your goals sooner.
Learn more about our personal loans today.
This article is intended to provide general information of an educational nature only. This information has been prepared without taking into account your objectives, financial situation or needs. Therefore, before acting on this information, you should consider its appropriateness having regard to these matters and the product terms and conditions. Terms, conditions, fees, charges and credit criteria apply. Information in this article is current as at the date of publication.