Personal Loans

How to find the best personal loan for your needs and budget.

What is a personal loan?

A personal loan is a type of credit that allows you to borrow a fixed amount of money and repay it over a set period of time, usually with interest. You can use a personal loan for various purposes, such as consolidating debt, paying for a car, home renovation, wedding, travel, or medical expenses.

What are the benefits of a personal loan?

The home loan market in Australia is very competitive and diverse, with hundreds of lenders and thousands of products to choose from. You can find home loans from banks, credit unions, building societies, non-bank lenders, mortgage brokers, and online platforms. Each lender has its own eligibility criteria, interest rates, fees, features, and customer service standards. You can compare home loans based on the following factors:

A personal loan can help you achieve your financial goals and cover unexpected costs.
A personal loan can offer lower interest rates than other forms of credit, such as credit cards or payday loans.
A personal loan can improve your credit score if you make timely repayments and reduce your debt-to-income ratio.
A personal loan can give you more flexibility and control over your repayment terms, such as the loan amount, duration, and frequency.

What are the drawbacks of a personal loan?

A personal loan can increase your debt burden and affect your cash flow if you borrow more than you can afford to repay.
A personal loan can incur fees and charges, such as application, origination, late payment, or early repayment fees.
A personal loan can affect your credit score if you miss repayments, default on the loan, or apply for multiple loans in a short period of time.
A personal loan can have higher interest rates than secured loans, such as home loans or car loans, which require you to provide an asset as collateral.

How to find the best personal loan in Australia?

There are many lenders and products in the Australian personal loan market, so it is important to compare your options and find the best one for your needs and budget. Here are some factors to consider when choosing a personal loan:

The interest rate: This is the percentage of the loan amount that you pay as interest. The interest rate can be fixed or variable, and it can vary depending on your credit score, loan amount, loan term, and lender. Generally, the lower the interest rate, the less you pay in total.
The comparison rate: This is the interest rate plus the fees and charges that apply to the loan. The comparison rate gives you a more accurate picture of the true cost of the loan. The comparison rate can vary depending on the loan amount and term, so make sure you compare the same loan scenarios.
The fees and charges: These are the extra costs that you pay on top of the interest. They can include application, origination, service, administration, late payment, early repayment, or exit fees. Some fees are fixed, while others are based on a percentage of the loan amount or the outstanding balance. The fees and charges can vary depending on the lender and the loan product, so make sure you read the fine print and ask for a full disclosure of all the costs.
The loan amount: This is the total amount of money that you borrow. The loan amount can range from $1,000 to $100,000, depending on the lender and your eligibility. The loan amount can affect the interest rate, the fees and charges, and the repayment terms. Generally, the higher the loan amount, the more you pay in interest and fees, but the lower the monthly repayments.
The loan term: This is the duration of the loan, or how long you have to repay it. The loan term can range from 1 to 7 years, depending on the lender and your preference. The loan term can affect the interest rate, the fees and charges, and the monthly repayments. Generally, the shorter the loan term, the less you pay in interest and fees, but the higher the monthly repayments.
The repayment frequency: This is how often you make repayments on the loan. The repayment frequency can be weekly, fortnightly, or monthly, depending on the lender and your preference. The repayment frequency can affect the interest rate, the fees and charges, and the total amount you pay. Generally, the more frequent the repayments, the less you pay in interest and fees, but the higher the repayment amount.
The features and benefits: These are the additional services or offers that the lender provides with the loan. They can include flexible repayment options, redraw facility, etc.

Back to Finance