In Australia, there is a period of time when you might be old enough to work and earn your own money, but not old enough to take out a personal loan.
In this article, we will discuss exactly how old you need to be to sign a cash loan contract in Australia and share some tips on how to prepare for your first application.
Even when you hit the required age, getting approved will not be as easy as you might think!
The Minimum Legal Age for a Cash Loan in Australia
In Australia, the legal minimum age to take out a personal loan is 18 years old.
Under Australian law, you are unable to enter into a binding credit contract of any kind until you are legally recognised as an adult.
Your savings record and employment status are completely irrelevant to lenders if you are 16 or 17, as you cannot legally sign the contract.
However, your financial habits will become extremely important the day you turn 18, because simply hitting the legal age requirement does not guarantee an approval.
Minimum Age Requirements Vs Lender Policies
Once you turn 18, there are no guarantees you will be approved for a personal loan.
Lenders prefer to lend to people who have an established record of borrowing and repaying money responsibly.
While there are specialist non-bank lenders who are willing to give young adults their first loan, there will still be strict criteria to meet.
The loan is also likely to be more expensive than the headline rate you may see at a mainstream lender.
Which also makes the repayments higher.
To be approved, a lender needs to verify your income and living expenses to prove that you can manage these repayments.
This will often require the submission of 90 days’ worth of bank statements.
If you apply on your 18th birthday, the lender will be reviewing your financial behavior from when you were 17 to ensure you have the capacity to repay the loan.
How Age Affects Your Loan Application
To fully understand how being a young borrower affects your cash loan application, it is important to understand what a lender is looking for.
You will be assessed on:
- Your credit history (or lack thereof).
- Employment tenure and income stability.
- General repayment capacity and living expenses.
- Your reliance on short-term lending products.
Because you are young, you may struggle to demonstrate a reliable history in these areas.
1. Lack of Credit History
If you have just turned 18, you probably haven’t entered into a credit contract yet.
Lenders prefer borrowers with a proven track record of repaying debts on time. Without past loans or credit cards, lenders have little data to assess your reliability.
They will scrutinise your bank statements much more closely as a result to see your spending patterns and how you manage your money.
2. Lower Starting Salaries
Even if you have already entered the workforce full-time or are working casually while studying, you are at the very beginning of your working life.
This usually means your salary is lower than average, which means it can be harder to show you can comfortably afford the repayments.
You may still be able to service a cash loan, but your borrowing power will be limited to smaller amounts that fit safely within your disposable income.
3. Wage Advance Loans
Some young people turn to Wage Advance apps as soon as they turn 18. The temptation of easy access to cash with proper checks and balances can be a slippery slope.
Avoid this if you can.
Frequent use of short-term lending products shows a lender that you cannot manage your regular expenses between paychecks.
If your bank statements are littered with these transactions, your application for a personal loan could be declined.
Can You Get a Cash Loan at 16 or 17?
No, you cannot legally take out any form of personal loan if you are under 18.
While some large, secured loans allow a parent to act as a formal guarantor for a minor, this is generally not how short-to-medium-term cash lending works.
For a MACC personal loan, you must qualify on your own merit.
This type of loan is only suitable for those who are over 18, need urgent access to funds, and have the means to comfortably make the repayments.
Frequently Asked Questions
Do I need a credit score to get a personal loan at 18?
Not necessarily. While having a good credit score helps, at 18, you likely have a “thin” credit file (meaning no score exists yet). Many lenders will assess your personal loan application based on your employment income and bank statement history instead of relying solely on a credit score.
Can I get a personal loan if my income is from Youth Allowance?
No. Lenders require a primary source of stable employment income. Government benefits like Youth Allowance or Austudy are considered temporary and are generally not accepted as a primary income source for a personal loan.
How long should I wait after turning 18 to apply?
You can apply immediately, but it is highly recommended to ensure you have at least 90 days of consistent employment income and perfectly clean bank statements prior to submitting your application.
Preparing to Finance Your First Loan
While you may be counting down the days until you turn 18 to get your first personal loan, there is a lot more to consider to ensure you are actually eligible for approval.
If you prepare by holding down a steady job, keeping your bank account in a positive balance, and avoiding the temptation of wage advance apps, you will be far better placed to apply as soon as you are legally old enough.
If you are 18 or older, earning a regular wage, and need a cash loan between $2,001 and $5,000, the team at Gusto Cash is here to help.
