When you need a loan to help you get back on your feet, there is nothing worse than having creditors tell you that you do not qualify because you’ve fallen down. A lot of Australians have taken a fall over recent years, and their credit ratings have dropped along with them. The economic recession has cost many people their jobs and created other hardships. If you only recently have gotten a job again, or you are trying to start your own business, you may need a little extra money to help you out in the meantime. How can you get a $5,000 bad credit loan in Australia?
1. Boost your credit rating
If possible, try to repair your credit rating first, so that you can qualify for a loan with a better interest rate and fewer fees. If you have a credit card or other debts, do everything you can to catch up on your payments and stay current. If you manage to do this, six months down the road, your credit rating may start to look better. If you need the loan now for an emergency, that obviously is not an option, but if you are not in a huge hurry, it is a good place to start.
2. Can a community program help you?
Here in Australia, there are non-profit organizations which help out members of the community with their needs. One organization to look into is the Good Shepherd Youth and Family Service, which has been operating in Australia for 150 years. The organization offers no interest loans and low interest loans to people who are in a low income bracket. The no-interest loans are very small, but the low interest loans may suit your purpose if you are looking for a $5,000 loan. With this type of loan, you can finance a car, computer, or another domestic expense. You are given a few years to pay these loans off, and the low interest rate never balloons.
Organizations that provide loans to disenfranchised community members usually restrict the uses of their loans to a few purposes, but if your purpose fits with theirs, and you qualify under their eligibility guidelines, you may very well find a community program like this one to be the best option. Do some research before you apply to make sure that what you plan to use the loan for fits with the program’s guidelines.
3. Consider a secured loan
One of the most reliable methods for obtaining a $5,000 loan when your credit rating is low in Australia is to apply for a secured personal loan. This is a type of loan where you must offer up some kind of collateral which is equal in value to the loan. Obviously you cannot offer up cash as a collateral, or you would not need the loan. If however you own property, you may be able to secure the loan to your property. For example, if you have equity in a house or a car which is equal to $5,000 or greater, you can provide this equity as collateral. There is of course a risk when you take out a secured loan. If you should fail to pay it back, you may lose the property you provided as security. If you do not have security provide, consider getting a co-signer with good credit to sign on the loan with you instead.
This does reduce the risk for the lender, though, which makes the creditor more likely to consider doing business with you, even if your credit rating is low. The risk to the lender is negligible at this point, since they can always take your property if necessary to recover the amount of the loan. If you are certain you will be able to pay back your loan in a timely fashion, a secured loan is a great option for you because it allows you to work with a familiar lender, perhaps even your own bank. When you deal with subprime lenders on the other hand, you may not be sure whether you can trust the company you are thinking of borrowing from.
4. Look into getting a payday loan or subprime loan
If you do not have collateral for a loan, or your need the money right away and do not want to go through a lengthy approval process, you can consider going through a subprime lender or a payday lender. These are not interchangeable terms, though there is a big crossover between them. A subprime lender is a lender who is willing to work with customers who do not have stellar credit ratings. These may be long- or short-term loans. A payday lender or short-term lender specifically provides loans for only a few weeks or months. The payday lender may or may not be interested in your credit rating; it depends on the company you go with.
There are two main risks you should be aware of when dealing with these types of lenders. The first is the risk of getting scammed. Since subprime and payday lenders work with desperate customers, they know they have the upper hand. Some companies are less than legitimate, and may rob you blind. The other detractor you should be aware of is the high cost of a subprime loan. Even if you find a company which you can trust, you will be paying a very high interest rate and fees for your loan. As such, these are last resort options.
Getting a $5,000 loan in Australia when you have bad credit can be a challenge, but it is not impossible. Before you sign on any loan contract, read the fine print and be aware of any and all costs associated with the loan. Even if you are desperate, you do not want to dig yourself into a deeper hole than you are already in. The good news is, if you do qualify for a loan and pay it back on time, that will boost your credit rating, and the next time you apply for a loan, it will be easier.