How to avoid making mistakes when applying for a personal loan

Font Size:

No matter your age and stage, credit cards are becoming the go-to financing option when making purchases with money you don’t have to hand.

Whether it’s making a big purchase, settling an unexpected bill, or paying for a holiday, many Australians simply put it on plastic.

According to, in the past 15 years, older Australians’ credit card debt has skyrocketed from $4000 on average to $8000.

Yet, compared to credit cards, personal loans often have lower interest rates and offer fixed repayment rates. In theory, this should make personal loans a much more attractive option for those who need finance but don’t want to pay excessively for it.

Maybe credit cards are comfortable. And, yes, the process of applying for a loan can be littered with easily avoided mistakes. So, if you are planning on applying for a personal loan, here are some simple tips from Savvy to ensure that you don’t fall into any financial traps.

Going for the first loan your bank offers
It seems simple – just pop into your bank, apply for your personal loan, and you’ll be on your merry way. However, the loan that your bank has on offer may not be the best deal for you and your circumstances. Many non-bank lenders may have products better suited to older people and pensioners. Some banks and lenders will also approve loans for self-funded retirees. Just like any major purchase, it pays to shop around for a better deal.

Accepting unfavourable terms
All lenders are bound by strict codes of conduct and regulations, such as the Consumer Credit Code (National Consumer Credit Protection Act 2009). However, because borrowers aren’t aware of these laws, many still voluntarily enter personal loan arrangements that are not in their favour.

Some lenders may class retirees as a higher risk, even though they may have a large portfolio of assets and investments, which makes them a safer bet than a fresh-out-of-school 18-year-old!

So, it pays to keep this in mind when you do shop around.

Savvy CEO Bill Tsouvalas says knowledge is the key to finding a good deal.

“Some lenders will talk in jargon, say that their rate is low and not explain the fees and charges. Where possible, look for comparison rates; they show you how much the loan really costs, including most of the fees,” he said.

Going in blind without a credit history check
When you apply for any major type of finance, your bank or lender will conduct a credit check. You should pre-empt their check by doing one of your own. A credit history reveals all the times you’ve applied for credit, paid off loans, and incurred defaults. Sometimes, defaults aren’t your fault. It’s also possible that overzealous telcos or utility companies slap defaults on your report, even if you settle an overdue bill. Unfortunately, it’s your job to find errors and correct them. This can help you gain a better rate, as it shows you’re a more responsible borrower.

Fudging the numbers
If you are afraid that your application for a personal loan may not be approved for a personal loan, don’t fudge the numbers. You have many options when borrowing and, as we stated earlier, having a high asset or investment portfolio can work in your favour. Your broker or lender wants to lend to you (a commission in their pocket is one very good reason why!) – so be upfront with them, and they’ll be more inclined to help.

Join YourLifeChoices today
and get this free eBook!

By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy

Written by Sponsored Content


Total Comments: 2
  1. 0

    Anything to do with banks or other financial institutions will involve you being ripped off. I’m with Bill Shorten all the way: ROYAL COMMISSION INTO BANKS (etc.) NOW!

    • 0

      PS: Save as much as you can, avoid credit cards (if you have one, always pay on time) and if you can, use debit cards instead,



continue reading


Do life insurance payouts affect the Age Pension?

Geoff's death policy pays out to his children, not his wife. How does this affect the pension? Q. GeoffMy wife...


Grip strength linked to mental disorders

Mental disorders such as anxiety and depression can increase physical health risks and are a leading cause of disability. Globally,...


Tobacco and childcare drive cost of living increase

The Consumer Price Index (CPI) rose 0.9 per cent in the December quarter. According to the Australian Bureau of Statistics...

Age Pension

Retirement system ‘uncertain for almost all retirees’

Australia, a nation of almost four million retirees, has one of the world's best retirement systems. The 2020 Mercer CFA...


The big question: How much do I need to retire?

Life expectancies continue to rise, and with that comes a host of challenges. For governments, there's the increasing cost to...


Understanding the true cost of retirement

The Australian government spends billions on boosting retirement incomes. The two biggest costs, the Age Pension and superannuation tax concessions,...

Age Pension

Adequacy of retiree nest eggs

YourLifeChoices conducts several surveys each year to gauge the financial, physical and mental health of our 260,000 members. The aim...

Age Pension

Age Pension payments in 2021 – what you need to know

World heavyweight boxing champion, Olympian, ordained minister and successful entrepreneur George Foreman returned to the ring at the age of...