Choosing a personal loan that's right for you

While shopping around for a personal loan might seem like a good idea, often, it can have the opposite effect. Each time you apply for a personal loan, a record will be left on your credit file showing that you applied for credit. Multiple credit enquiries from different lenders can result in a reduced credit score. This can make you a less attractive applicant to some lenders and potentially lead to your loan application being declined, or a higher interest rate being charged, if approved.

Lenders consider many factors when assessing a loan application, such as income, credit history, existing liabilities, employment, residential stability and other information included in your application. You can take steps to improve your chances of being approved, by reducing existing debts, always making loan repayments on time, having stable employment and income.

While being turned down for a personal loan can be disheartening. The first step to getting back control of your financial situation is to find out from your lender why your application was declined, and to make sure the information on your credit file is accurate.

Before you apply, it's best to consider your options. There are many lenders offering different personal loan solutions. Making a list of the features and benefits that are important to you can help identify which personal loans could meet your requirements. Although the interest rate may be important, you should consider all features and benefits, to help you decide which of these may better suit your needs. For example:

• Are there application and ongoing monthly fees associated with the loan?
• Can you make extra repayments without paying early repayment fees?
• Do you want to provide security for the loan (e.g. a motor vehicle)?
  
• Do you want a fixed or variable interest rate?

Yes, there is! You can get your interest rate quote before you apply for a personal loan with some lenders. At Pepper Money, you can use our get my rate tool or go through an accredited personal loan broker to apply for an individual interest rate quote. Better yet, it won't impact your credit score. This is done by using an authorised "access seeker" to make an enquiry on your credit report.

An access seeker is a person (or company) that is authorised in writing by you to make an enquiry on your credit file. An enquiry made by the access seeker does not impact your credit score, but it assists lenders to better understand your circumstances. While the interest rate is tailored to you, this is not a loan approval. A personal loan application will still need to be submitted and is subject to assessment and verification by the lender.

Achieving your goals can be exciting. However, there are things you should consider before deciding if a personal loan could be right for you. It's worth taking the time to understand what you want from a loan before applying. 

Want to know more? Contacting a broker could be a way for you to understand your options. Otherwise, our real-life guide to Personal Loans answers the common questions, outlines the application process and discusses important things to look out for.