Most personal loans offer terms of 1-7 years, so you can choose how long you take to repay.
You'll get a personalised interest rate, largely based on your credit score, with offers typically ranging from 7% p.a. to 25% p.a.
Fixed rate loans have the same interest rate over the term of your loan. Variable rates go up or down based on the current market.
You can get a better deal by comparing personal loans before you apply. Here's what to look at:
The difference between an interest rate of 9% p.a. and 8% p.a. for a $20,000 loan over 7 years is over $800 in interest. Check out Finder's best personal loans to see our top picks of the month.
Your personal loan interest rate will often be based on your credit score and credit history. It's best to get a quote from a lender once you are comfortable you fit their eligibility criteria. That quote should include the interest rate you are offered, as well as any fees.
When you have that information, use a personal loan calculator to be able to confidently tell what you're repayments will be like.
Your credit score will often impact the interest rate you receive for a personal loan. This is called risk-based pricing, and can mean the difference between a personal loan at 7% p.a. or 25% p.a.
Only your Australian credit score matters. If you have no credit history in Australia then you will need to establish one before qualifying for most personal loans.
You can and should check your credit score before applying for a loan. That way you can fix problems ahead of time and get a better rate. You can do that, and get tips on how to improve your score, free with Finder.
Personal loans can be a worthwhile solution to a common problem - accessing money you don't have right now. You can use them for a wedding, holiday, emergency bills, or essentially anything you want that you can legally buy.
While most loans are for "any worthwhile purchase", there are specialised loans for businesses and for vehicles.
Whether or not a personal loan is the right option for you depends heavily on your circumstances. In general, they have more flexible eligibility requirements than credit cards and you may have an easier time borrowing larger amounts of money without having an extensive credit history. Interest rates for personal loans also tend to be lower - though credit cards could be cheaper if you use a low interest credit card or if you can pay the card off within the no-interest period.
If you are struggling financially and need a small amount of money quickly, there may be better options for you than a personal loan. Responsible borrowing is important to avoid the cycle of debt. For more resources on this, visit the Australian government's MoneySmart website*.
Secured personal loans are personal loans where you agree with your lender that they can repossess one of your assets if you default on the loan. You agree to what the asset is when you apply, and its usually an item such as a car. This makes you less risky to lend to, so can help your loan get approved or even get you a lower interest rate.
Unsecured personal loans are the most common type of personal loan. They do not have an asset tied to them, so are much more straight forward but they tend to be more expensive than secured personal loans.
Car loans tend use the vehicle as an asset, but some second-hand car loans are unsecured. You can get a car loan through a bank, a private lender or a car dealer.
Bad credit personal loans exist, but they are very expensive. They are also known as payday loans or short term loans. They should only be used as a last resort. If you are struggling with your finances and credit history, you can get free financial advice by calling the National Debt Helpline on 1800 007 007.
Debt consolidation loans roll your debts into a single loan so you only have to make one monthly repayment and can save on rates and fees. You can use it for other personal loans, credit cards and even buy now pay later balances.
All lenders must follow the same regulations and code of conduct, making non-bank lenders as safe to borrow from as the Big Four banks.
We've summarised your main options:
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