Unsecured personal loans

Liberty unsecured personal loan FAQs

• What determines my personal loan interest rate?

  Liberty personal loans assess borrowers based on a number of factors such as credit score and financial history. To find out what your personal loan interest rate will be, check your tailored rate here. It takes just two minutes and is completely obligation free.

• What can I use my unsecured personal loan for?

  Your unsecured personal loan can be used for any predominantly personal or personal investment purpose, as long as it’s legal. Examples include debt consolidation, renovations, travel, investments, medical expenses, wedding costs or to purchase a car or boat.

• Who can apply for an unsecured personal loan?

  Anyone over 18 years of age who is a citizen or permanent resident currently living in Australia, can apply for a Liberty unsecured personal loan. To be eligible, applicants need to be employed and earn a minimum of $20,000 per year (the majority of your income cannot be from Government benefits).

• How does a secured loan differ from an unsecured loan?

  An unsecured personal loan is not backed by any security. This means in the event that a loan is not repaid, the lender does not have any security it can recover to repay the amount owing. Secured personal loans are less risky for lenders and therefore tend to have more favourable terms than unsecured personal loans, such as lower interest rates or higher lending amounts.

• Will my personal loan application affect my credit score?

  When you get a personal loan interest rate estimate we access your credit file in a way that is not visible to other credit providers and does not affect your credit score. However, when you submit a full personal loan application Liberty will then conduct a 'full credit enquiry' which other credit providers can see and which may affect your score.

• Read the transcript: The ultimate guide to personal loans

  Personal loans help Aussies from all walks of life to afford necessities, projects and dreams that would otherwise be financially out of reach.

  Most of us take out loans for our home, car, or business, but what about other expenses that pop up such as weddings, new babies, or home renovations? You may also have opportunities for travel or self-improvement, unforeseen increases in living expenses, debt or a need to help a loved one.

  These are all kinds of reasons that people find themselves needing some extra cash flow and a personal loan can help borrowers bridge this gap. And fortunately, modern lenders make it easier, faster than ever to get a personal loan that fits your specific needs and financial situation.

  How much can I borrow with a personal loan?
  How much you can borrow with a personal loan depends on a number of factors. As with any type of loan, your lender will want to see evidence of your ability to repay. You'll be able to borrow more if you have a solid credit history and stable income. But even if you don't, certain lenders may still be able to approve you for a personal loan.

  If you are a borrower with a low credit score or new job you will likely pay a higher interest rate or have a lower maximum loan amount. The amount you can borrow with a personal loan will depend on your overall financial situation, as well as the loan term.

  What is a small personal loan?
  A small personal loan is usually considered less than $2,000. Named 'payday loans', these types of loans generally attract higher interest rates with a short time frame to be repaid.

  In contrast, people take out larger personal loans for more significant sums that they don't have time to save for. Most major lenders have personal loan minimums of about $5,000.

  What is an unsecured personal loan?
  An unsecured personal loan is a loan that is not asset-backed. The loan is approved solely on the lender's review of the borrower's ability to repay.

  Now with an unsecured personal loan, the lender has no assets to sell to recoup losses if the borrower defaults. Because the risk to the lender is higher, interest rates tend to be higher than for secured loans.

  However, for those with good credit the rates may still be very competitive. Borrowers with recent history of bad credit, high existing debt, or unusual income sources may have more limited options when it comes to accessing an unsecured personal loan.

  It may still be possible, but the interest rate will be higher than it would be for a secured loan. Now unsecured loans are generally best for borrowers who don't have any significant assets, but who do have a strong credit history and solid financial positioning.

  What is a secured personal loan?
  A secured personal loan is a loan that is taken out against an asset that serves as collateral. With a secured personal loan, the lender can recoup their losses if the borrower defaults by selling the asset that's used as security for the loan.

  Secured personal loans are mostly used to buy new or used motor vehicles, and interest rates for secured personal loans tend to be lower than for unsecured personal loans.

  Because there is less lender risk, and unlike an unsecured loan, the lender has recourse to that underlying asset if the borrower becomes unable to service the loan.

  What is the interest rate on a personal loan?
  Interest rates for personal loans will fluctuate with market conditions, but the specific interest rate offered when you take out a personal loan generally remains the same throughout the life of the loan. Plus, with fixed repayments you can budget more easily.

  It's important to note that some lenders take more of a one-rate-fits-all approach to their personal loan offering. Now this means that even if you have an exceptionally strong credit profile, well your interest rate will be the same as everyone else.

  It may also mean that if your financial situation isn't ideal, the lender may actually decline your application if it doesn't cater to their narrow risk profile.

  Getting declined by one lender can hurt your chances of getting approved elsewhere, so it's really important to do your homework and find a lender who is likely to approve you first time around.

  Using a lender that offers personalised interest rates that are catered to your own credit profile can help reduce this risk. Some lenders provide quick and easy interest rate estimate tools online that don't impact your credit file, and this will allow you to find out what your likely interest rate would be before even formally applying.

  Can I get a personal loan if I have bad credit?
  Yes. Some lenders will approve you for a personal loan, even if you have a bad credit history. Traditional lenders are more likely to deny applications for personal loans unless the borrower has a certain minimum credit score.

  But these days, more and more specialty lenders have the resources and the flexibility to look more closely at an applicant's total financial picture. And the reality is that many people's credit scores don't actually reflect their current ability to repay a new loan.

  An applicant may have experienced a job loss or financial hardship in the past, but they've since regained their financial footing. Borrowers with bad credit may be subject to higher interest rates on personal loans, but the rate is still potentially lower than the one charged on credit cards or even past due accounts.

  For this reason, borrowers seeking to merge multiple credit card debt sometimes they take out a personal loan, and it can cut down on the total monthly expenditure as well as simplify everything into one easy payment.

  Lenders typically look more favourably on borrowers with only one loan account rather than those with many different ones through different creditors and everything feels out of control.

  Consolidating debt with a personal loan can make it easier to get a home, business, or car loan in the future.

  How long does it take to get a personal loan?
  How long it takes to get a personal loan depends on your lender's policies, turnaround times and really, the technology offering.

  More Aussies are obtaining personal loans through online lending outlets, and applicants no longer need to gather all their financial documents, attend the bank in-person, sit down with a representative and explain all the reasons they need the money and why they're going to be able to pay it back. 

  With the advent of secure online portals, many modern lenders can now access your bank statements and pay slips online and this expedites the application and approval process.

  It is not unrealistic to expect an indicative pre-approval in as little as two minutes. With improvements to our national payment arrangements, it's now possible to fund some personal loans in as little as an hour.

  Different lenders have different timelines, so ask before you apply. Note that if you are self-employed, it may take a little bit longer to get approved for a personal loan because your income stream may not be as regular and as quick to verify.

  Contractors, small business owners, and freelancers may also need to supply tax returns or alternative income proof, but for all borrowers getting a personal loan it doesn't take nearly as long as it used to and the application process it's much more streamlined - particularly depending on the lender that you use.

  Will applying for a personal loan affect my credit score?
  Getting an online interest rate quote for a personal loan won't affect your credit score and this is usually a very quick process and it only takes a couple of minutes.

  However once you're ready to take that step and submit a formal application, it's at that point the lender will conduct a formal credit inquiry, and that will leave a note on your credit file and also feed into your credit score.

  It is important to do your research before formally applying for a personal loan. Too many applications for credit in a short time frame it can significantly impact your credit score and your likelihood of approval for a new loan.

  How do I apply for a personal loan?
  Before you apply for a personal loan do your research. Instead of just going to the same bank that you've always gone to take advantage of the various financial comparison websites that compare the different lenders and products for you.

  From here you can then check out several lender websites and see if they offer personalised interest rates online. You can get an indication of your potential interest rate in just two minutes or less without affecting your credit score.

  Before you proceed with a formal application, gather all your relevant income documents and financial information. You may need them for reference but you may not even need to submit them at all. That's because many online personal loan lenders can actually confirm your income by accessing your bank account statements directly through secure online portals. This spares you the hassle of scanning or emailing a bunch of documents, or going into a branch to apply in-person.

  A broker or finance advisor can also help you with your application and can communicate with the lender on your behalf.