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Whether you’re renovating your home, paying off debts, or covering unexpected expenses, a personal loan gives you the financial flexibility you need. Aussies love personal loans because they offer competitive interest rates, flexible repayment terms, and quick approvals.
A personal loan lets you borrow money for personal use. Unlike a home loan or car loan that’s tied to a specific asset, personal loans are flexible – you can use them for almost anything.
Let’s break down the different types so you can make the right choice for your situation.
With an unsecured loan, you don’t need to provide an asset as collateral. Therefore, they typically have higher interest rates than secured loans. They’re great for debt consolidation, travel, or small home improvements.
These loans are secured with collateral, such as your car or savings. This reduces the risk for lenders, allowing them to offer lower interest rates. Secured loans are ideal for bigger expenses, such as major home renovations.
On a fixed-rate loan, the interest rate is constant and stays the same for the entire term. That gives you predictable repayments and makes it easier to budget. Note that certain lenders may also impose fees on early repayment of the loan.
Interest rates on a variable-rate loan may change with the market. In other words, you might benefit from lower rates if the market drops. And there are commonly no penalties for making additional repayments.
A debt consolidation loan allows you to combine various debts like credit card balances into a single loan. This simplifies repayments for you and potentially helps you save on interest.
When you compare personal loans, you need to look out for the following aspects:
While each lender has different requirements, here’s what most look for as a starting point:
A higher credit score means better chances of approval and lower interest rates.
Use comparison tools to look at interest rates, fees, and features.
You'll typically need Proof of identity (passport or driver's licence), Proof of income (payslips or tax returns) and Bank statements (last 3-6 months)
Submit your application to your chosen lender and await their decision. Be honest with all information to avoid delays.
Most approvals take 24-48 hours, and funds are usually deposited straight into your bank account.
Personal loans are incredibly versatile ways to get what you need sooner. Here are some popular uses:
If you’re juggling multiple credit cards or personal debts, consolidating them into a single loan can simplify your finances. With one easy monthly repayment, it’s easier to stay on top of your budget and potentially save money through a lower overall interest rate.
Whether you’re upgrading your kitchen, remodelling a bathroom, or tackling unexpected repairs, a personal loan can help fund your home improvements. Renovations not only enhance your lifestyle but can also add significant value to your property.
Medical costs can arise unexpectedly, especially for elective surgeries or dental treatments that aren’t fully covered by insurance. A personal loan can help you manage these expenses without delaying important care.
If it’s time to take that dream holiday, a personal loan can help cover the costs upfront. From flights and accommodation to spending money, financing your trip allows you to enjoy your travels now and repay over time.
Planning a wedding or major celebration can be expensive. A personal loan can help cover costs such as venue hire, catering, photography, and more—so you can focus on enjoying your special day without financial stress.
Investing in education is an investment in your future. Whether it’s a university degree, professional course, or skills training, a personal loan can help you cover tuition fees, materials, and related costs to advance your career.
A personal loan can also be used to buy a car, especially if you don’t want a dedicated car loan. Depending on your circumstances, a secured loan may offer better interest rates and more flexible repayment options.
Unexpected costs like car repairs or appliance breakdowns can put pressure on your finances. A personal loan can provide fast access to funds, helping you avoid using high-interest credit cards in an emergency.
The June quarter has delivered encouraging news for Australian personal finance, with fixed-term loan commitments reaching $9.0 billion – marking a robust 16.8% increase from the same period last year. This growth reflects Australians’ continued confidence in making significant financial commitments across various categories, from vehicle purchases to personal investments.
Road vehicle financing drove much of this expansion, climbing to $4.9 billion with a solid 14.0% year-on-year increase. Meanwhile, other personal loan categories – including personal investment, travel, and household goods – showed even stronger momentum, surging 20.7% to $4.1 billion. These figures suggest Australians are actively pursuing both essential purchases and lifestyle investments, demonstrating resilience in their personal financial planning despite broader economic uncertainties.
Source: ABS
| Feature | Personal Loan | Payday Loan |
|---|---|---|
|
Loan Amount |
$2,000-$100,000 |
$500-$2,000 |
|
Advertised Rate |
1-7 years |
5-20 weeks |
|
Added Fees |
$50/mo. |
None |
|
Loan Term |
5 Years |
5 Years |
|
Monthly Repayment |
$854 |
$813 |
|
Total Interest Paid |
$11,262 |
$8,801 |
You might have heard of payday loans as a quick cash solution. Here’s why they’re very different from personal loans:
Tip: Payday loans should be a last resort. The high costs and short repayment terms can trap you in a cycle of debt.
From instant calculations to trusted lender comparisons, we make it simple to find the right loan for your needs.
Find clear answers to the most frequently asked questions about personal loans.
Almost anything personal – home renovations, debt consolidation, medical bills, weddings, travel, and emergencies.
Usually between $2,000 and $100,000, depending on your income, credit score, and the lender.
Any asset that is equal to or exceeds the value of the loan. This may be a car, motorbike, boat, caravan, or even jewellery and high-value items such as guitars and furniture. Not all lenders will accept collateral for a personal loan; it’s best to ask and assume it works on a case by case basis.
Many lenders offer same-day or next-day approval for qualified applicants.
Yes, most lenders allow early repayment, though some may charge an early exit fee. Always check your loan terms.
You’ll likely face a late fee and it could hurt your credit score. If you’re struggling, contact your lender immediately – they’re required to help find a solution.
While a good credit score helps, many lenders work with people who have fair or average credit – even bad credit.
Yes, but you may need extra documentation like tax returns or business financials.
Usually no, unless you use the loan for investment purposes (like buying shares). Check with a tax professional.
Some lenders specialise in bad credit loans, though you’ll likely pay higher interest rates. Consider improving your credit score first or look into secured loans where you can use an asset as security. If you are a recently discharged bankrupt or party to a court judgement, it’s highly unlikely you’ll be approved for a personal loan.
A personal loan can be a smart financial tool when used responsibly. Now that you understand the different types available and how to compare lenders, you’re ready to make an informed decision that fits your financial goals.
Ready to get started? Use our comparison tools to find the perfect personal loan for your needs today.
