What to expect when applying for a first loan

Buying that first car, motorbike or boat is a rite of passage for many young people. But even older people can embark on their first purchase in their own name. These purchases usually require finance for all age groups. Changes in life circumstances can see even mature age persons making their first major purchase and applying for a first loan.

Regardless of age, applying for a first loan can be a daunting and confusing process. But it doesn’t have to be. Jade Finance explains what people may expect when applying for a first loan to purchase a car, motorbike or boat and how we can assist.

First Loan Applications

Loans for purchase of goods to be used for personal use are categorised as Consumer Finance as opposed to Business Finance which is for goods used in a business. The loan products are different as are the interest rates. So ensure you are looking at the correct category.

Consumer finance and lending in Australia is regulated by ASIC with a specific objective to protect the consumer. Consumer Laws cover how lenders must act in issuing loans to consumers. The laws include Guidelines for Responsible Lenders that Licensed Credit Providers such as Jade Finance must adhere to. If considering the lender market, ensure the lender is licensed and displays a credit provider number.

Overview of consumer loan application process and basic loan requirements:-

  • Applicants must be 18 years or older to be eligible for consumer finance.
  • Persons under 18 may consider asking someone to go guarantor for their loan.
  • The application form requires details on income, employment history, financial situation including ongoing expenses and commitments, assets, residential status and history and personal details.
  • Identification will be requested. Check the details on verifying your ID.
  • An assessment of the applicant’s credit profile is a crucial part of the process. Even if a person has not applied for a consumer loan they are highly likely to have a credit profile. A range of accounts, payments and financial commitments can be recorded on an individual’s credit report by the provider.
    These can include BNPL (buy now pay later) accounts, phone and internet contracts, residential rent payments, credit cards, utilities bills. Maintaining a good credit rating or score is very important. To find out about getting a copy of your credit report and how to fix any errors, review the information at MoneySmart.
    The credit score reflects the individual’s risk assessment which effects the interest rate offered.
  • The total amount approved for the loan will be at the discretion of individual lenders. It will reflect the perceived ability to repay the loan. Being a first loan applicant does not necessarily preclude an individual from securing a large loan for say a higher priced car or boat.
  • When buying goods with a loan or ‘under finance’ as it is referred to, lenders will require the borrower to take out comprehensive insurance on the goods. Your Jade Finance consultant can assist with connections to insurers. The cost should be factored into the overall purchase.

First Loan Interest Rates

If you stay across finance, you will have heard that interest rates are at historic low levels. The RBA sets the official cash rate which is currently at 0.1% but that is not the lending rate for consumer finance. It relates to inter-bank loans and the costs of lenders borrowing to acquire their funds.

Consumer loan rates will vary across the lender market depending on how competitive an individual lender is seeking to be in a specific sector and their own funding costs.

If first loan applicants meet the criteria and submit a quality application in regards to ability to repay the loan, a cheap interest rate loan can be achievable.

Lenders will focus on the credit profile and the income issues as mentioned above when making a loan offer.

Comparison Rates are advertised by law with all consumer loans. Understanding the difference between advertised and comparison rates is important.

Car Loans

Some individuals have been driving for many years and possibly been using a car that was treated as their own but was actually owned by someone else. It may have been owned by a parent, a partner or even an employer. But then the time comes to buy their own car and they need to apply for a loan in their own right.

  • First loans can be secured for all types of vehicles.
  • Old v new may attract different loan conditions and possibly interest rates.
  • A driver licence is not required for a car loan.

Motorbike Loans

  • Learners can ride a motorbike on roads subject to state regulations, but must be over 18 to secure a loan.
  • There is a large selection of LAMs bikes available which new riders can consider.

Boat Loans

  • PWCs are very popular as a first boat purchase as are smaller trailer boats and tinnies.
  • We offer boat only, boat and trailer, and boat, motor and trailer combo loans.
  • Loan applicant do not need a boating licence.

Loan Calculators

Our loan calculators are extremely handy for first loan applicants. They allow potential buyers to quickly convert that price tag to repayment estimates. The monthly repayment amount can be a more relatable amount for loan seekers.

How We Assist

Using a finance broker is not an exclusive privilege of the rich and famous or of businesses. All individuals seeking finance can engage our broker-style lender services. We are accredited with many lenders which provides us with the ability to source the cheapest loan to suit individual requirements.

We provide a comprehensive lender service which can be particularly helpful for first loan applicants. Start the conversation and see how we can assist you.

Contact Jade Finance by phone 1300 000 008 to discuss a first loan for a car, motorbike or boat.