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How to apply for a loan in Australia?

How to get a loan when you’re new to Australia

Getting a loan for a new business or buying a home is often part of the process of migrating to Australia. But migrants face additional challenges when it’ time to get a loan.

You need to be eligible

To be eligible for a loan, you have to be at least 18 years of age and have some form of income to prove that you can make regular payments. On top of a salary, some Centrelink benefits, like family benefits count. Others, like Newstart, don’t.

You also need to live in Australia and Australian permanent residency is generally needed. But there are some exceptions for certain types of loans according to Melbourne mortgage broker Martin Mureithi: “Most banks require you to be an Australian permanent resident as a minimum for a personal or home loan; however, I have had experience with getting students and other people with temporary visas a car loan.”

He also says that some banks will consider people who have a partner visa.

Approved written on a white board

Show a good credit rating and saving records

Having a good credit history make getting a loan much easier. You can ensure that by paying your bills on time.

“So, traditionally, you have not had any default listed against you- for example, if you have not paid your mobile phone bill. What that means is, you have a bad mark against your name,” says Mureithi.  

“However, that should not be the end of life because there are lenders out there who will consider those applications on a case by case basis.”

You can also show a bank that you’re financially responsible by contributing regularly to your savings and not overdrawing your account.

A composite image of signage of Australia's 'big four' banks ANZ, Westpac, the Commonwealth Bank (CBA) and the National Australia Bank (NAB) signage in Sydney, Friday, Oct. 23, 2015.

Getting a microloan

If you’re a migrant in need of a small loan, some organisations can help.

Anglicare has lots of services that are available to anyone in the community, so migrants and refugees are very welcome to come along and be supported by any of our Anglicare services,” says Tessa Clark, a manager with the organisation.

“We also provide microfinance; they are no-interest and low-interest loans. They are available to people on low incomes. So migrants and refugees would be able to gain access to those programs as well.”

In Melbourne, AMES offers English tuition and vocational education courses, as well as financial orientation programs to new arrivals. Like Anglicare, they also provide microloans for refugees and migrants. In the last few years, they’ve helped dozens of refugees start their own small businesses.

Woman smiling to a man while they're having coffee

Do you really need a loan?

In some cases, getting a loan might be necessary. But when it’s possible, AMES Public affairs managers Laurie Nowell encourages migrants to try avoiding getting into debt at the start of their new lives in Australia.

“We’re not in the business of encouraging people to take out loans. It’s something where we encourage them to get the best advice they can. We’re not a financial broking institution, we’re not financial advisors, so we tread very carefully around the area of loans and migrants and refugees,” she says.

Teresa Clark from Anglicare agrees. She points out that since many low-income migrants and refugees with no credit history are excluded from obtaining more established financial products, they are in danger of becoming victims of loan sharks.

If you do decide to get a loan, try to get it from a reputable financial institution. Whether it’s possible or not, always take advantage of the financial advice services of organisations like Anglicare and AMES to get a second opinion.

Resource

Choice, an independent consumer advocacy organisation, has good information and tips about loans.