Tax Cuts and Take-Home Pay: A Potential Boost for Personal Loans

Great news! With Stage 3 tax cuts set to take effect on July 1st, many Australians are just weeks away from seeing a positive change in their tax bills. By expecting to benefit about 13.6 million Australians, this financial boost can have a positive impact beyond everyday expenses; it can also significantly improve your borrowing power for personal loans.

What are Personal Loans?

Personal loans are consumer loans offered by lenders to finance various personal needs, such as debt consolidation, home renovations, or unexpected expenses. Approval for a secured personal loan Australia is based on your creditworthiness, which includes factors like income, employment stability, and debt-to-income ratio.

How Tax Cuts Can Increase Your Borrowing Power

A key factor influencing your borrowing power is your after-tax income. With the upcoming tax cuts, you'll be keeping more of your hard-earned money. This higher take-home pay makes you a more attractive borrower in the eyes of lenders, potentially increasing the amount you can borrow for a personal loan.

Let's illustrate the impact in the upcoming Stage 3 tax cuts:

• Example 1: A single person earning an annual income of $100,000 could see their borrowing power for a personal loan increase by an estimated $21,000 thanks to the tax cuts.

• Example 2: A couple with a combined income of $150,000 might experience a jump of nearly $30,000 in their borrowing capacity.

Benefits Beyond Buying a Home

While tax cuts can be advantageous for securing a mortgage or upgrading your property, the increased take-home pay can also benefit existing borrowers. A larger income can make your current personal loan repayments feel more manageable, freeing up some financial breathing room.

Beyond Tax Cuts: Strategies to Enhance Borrowing Power

Don't wait for tax cuts to take action. Here are some proactive steps you can take to improve your borrowing power for personal loans:

• Reduce Expenses: Analyse your spending habits and cut back on non-essential expenses. This frees up additional cash to build a larger down payment or improve your debt-to-income ratio.

• Manage Credit Limits: High credit card limits, even if the balance is low, can impact your borrowing power. Consider lowering your credit limit or eliminating unused credit cards altogether.

• Increase Income: Explore ways to boost your income. This could involve taking on extra work, negotiating a raise, or starting a side hustle. Every bit helps!

Get a Personalised Assessment

Online calculators can offer a rough estimate of your borrowing power, but they lack the nuance of a professional assessment. Consulting a financial advisor or loan specialist can provide a more accurate idea of your borrowing potential based on your unique financial situation and goals. They can also help you develop a plan to achieve your financial aspirations.

The takeaway? Tax cuts can be a significant advantage for securing a personal loan or managing existing debt. However, you don't have to wait for them to take control of your financial future. By implementing smart financial strategies, you can actively improve your borrowing power and unlock the possibilities of a personal loan.

Ready to See How Much You Can Borrow?

Apply for a Personal Loan from The Loan Club Today! We offer personal loans from $20,000 to $200,000 to increase your borrowing power.

Disclaimer: The information provided here is for general knowledge only and does not constitute financial advice. Please consult with a qualified professional before making any financial decisions.