- Beginning an apprenticeship is exciting, but there are many financial aspects to consider before starting your journey.
- Apprentice loans and personal loans can ease your financial burden, but which is the best for your circumstances?
- Trade Support Loans are interest-free and you only start to pay back after you’ve secured a substantial income, but you may be able to borrow more with a personal loan.
Managing your finances as an apprentice can be hard. A loan could take some of the burdens off you, but when apprenticeship rates are notoriously low, you may find it hard to get approved for a loan. You needn’t lose hope, though.
We have done the research on personal loans for apprentices, their eligibility requirements and terms. Below we share some options you may want to consider.
In this guide
What is an apprentice loan?
Apprentice loans are loans offered by the government or credit providers to apprentices. The main differences from a personal loan are the simplified application process and flexible repayments.
Lenders who offer apprentice loans understand that you may not meet the minimum income requirements to qualify for a personal loan.
Government schemes allow you to pay back after you have secured a substantial income. Moreover, you may be eligible for a discount on the total loan amount if you complete your qualification.
The main disadvantage compared to a personal loan is the maximum amount you can borrow – which is often significantly lower than what you might be able to borrow through a personal loan.
How do apprentice loans work?
The government-approved loans for apprentices are called Trade Support Loans (TSL). Eligible apprentices can borrow up to $21,779 (for 2021-22) over the life of the apprenticeship. The loan is interest-free and is repaid through the tax system after the borrower has reached a minimum threshold.
Apprentices can opt-in and out of the TSL over the lifetime of the apprenticeship but cannot claim retrospective TSL payments. A 20% discount is offered to apprentices who complete their qualifications.
Loan options for apprentices
Apprentices have several government-backed loan options to consider. Alternatively, you could apply for a personal loan from a bank or financial institution.
Trade Support Loans
TSLs are designed to assist apprentices with everyday costs for the duration of their training, but only if you’re an apprentice in a skills needs occupation. Apprentices can receive up to $21,779 over the course of four years – the year of your apprenticeship determines the maximum amount you can receive.
To be eligible for a TSL, you must:
- Undertake a qualified apprenticeship
- Be an Australian resident
- Have Australian citizenship or hold a permanent visa
- Provide a tax file number
TSL payments have annual limits, which are higher in the early years to compensate for the lower wages. If you do more apprenticeships, you can only qualify for one TSL.
Youth Allowance
The Australian Youth Allowance is designed to help apprentices aged 16 to 24 and doing a full-time apprenticeship. You must also meet the Australian residence rules and satisfy an income and assets test.
Under this scheme, you can get up to $656 every fortnight, depending on your situation.
Austudy
Austudy is an option if you are 25 or older and studying a full-time apprenticeship. Similar to the Youth Allowance, you will have to pass an income test to be eligible. The maximum fortnightly payment is $656, depending on your situation.
ABSTUDY
ABSTUDY is designed for Aboriginal or Torres Strait Islander Australians enrolled in an approved apprenticeship programme. You may be eligible for a living allowance of up to $676.80, depending on your situation.
Personal loans
Personal loans for apprentices are generally loans offered by banks and other credit providers. Unlike government-supported loans and allowances, personal loans come with less flexible terms. Most lenders require you to start making repayments one to three months after your loan was approved. You will also be charged interest rates.
However, a personal loan is generally approved faster and you may be able to borrow more compared to a TSL.
Eligibility criteria for apprentice loans
Eligibility criteria vary based on the type of loan. For a TSL, there is no minimum age requirement, but a parent or guardian must back your application if you are under 18 years old. Most credit providers require you to be at least 18.
Other common conditions include:
- Australian citizenship or permanent visa holder
- Be an Australian resident
- Be a full-time apprentice in an approved programme
What to compare when choosing an apprentice loan
- Eligibility criteria, including minimum income, if applicable
- Interest rates. People with better credit scores tend to get access to lower rates.
- Repayment period. Tenure ranges between loans, with some available for as long as 7 years.
- Other fees. Check if there is an establishment fee.
Compare personal loans for apprentices
MoneyMe Low Rate and Flexi Loan
- Ideal for full- or part-time apprentices with at least $35,000 annual income
- Easy online application
- Flexible repayments with no early exit fee
- Borrow up to $50,000 payable up to three years
SocietyOne Personal Loan
- Ideal for full- or part-time apprentices with at least $30,000 annual income
- Centrelink is considered a supplementary source of income
- Borrow up to $30,000 payable up to three years
- No early exit fee
Jacaranda Finance Personal Loan
- Fast application processing and quick outcomes
- Borrow up to $15,000 payable up to three years
- Flexible repayments and no early exit fee
- Suitable for apprentices with at least $400 per week income
Verdict
Personal loans for apprentices can take some of the financial burden off your shoulders. TSLs and government allowances can help you with the living expenses until you secure a steady income. Personal loans could be a better choice if you need a large sum fast. We hope this guide can help you decide which option suits you best.
