With an unsecured personal loan you're borrowing money without putting up an asset (like a car) as security.
If you can't repay the loan there's nothing your lender can repossess and sell to recover your debt. Unsecured personal loans have slightly higher interest rates to compensate for the higher risk the lender is taking. They are typically easier to get than secured loans and rates can still be competitive.
With an unsecured loan you can borrow anywhere between $2,001 and $100,000 and terms range from 1 to 7 years.
Unsecured personal loans aren't tied to specific purposes in the way a home loan or a secured car loan is. They're quite flexible, and most lenders don't impose any restrictions on how you use the funds.
You can use an unsecured personal loan to:
Any money you borrow comes with risk if you can't repay it. The best way to minimise any risks that come a loan is to:
Borrowing a lot of money is riskier than a small amount, generally speaking. A 5% interest on a small loan won't cost you as much in interest charges as the same rate on a much bigger loan.
Here's a simple example.
| Loan A | Loan B | |
|---|---|---|
| Interest rate | 12% | 12% |
| Loan term | 3 years | 3 years |
| Loan amount | $3,000 | $8,000 |
| Total loan cost (loan plus interest) | $3,588 | $9,566 |
These loans are otherwise identical, but the higher loan amount ends up costing the borrower more than $1,500 in interest. Whereas the smaller loan is just $588 of interest.
You might think that getting a very small unsecured personal loan is less risky. But if you want to borrow less than $2,000 you probably can't get a personal loan.
Borrowing under $2,000 means you're probably looking at a payday loan. These loans don't have standard interest charges, but come with hefty fees. The price of a small, fast unsecured loan can actually be much higher.
Applying for any loan impacts your credit score temporarily. That's why you should only apply for one product at a time and try to avoid getting your application rejected.
Aside from the initial impact of the application, taking out an unsecured personal loan won't necessarily hurt your credit score. If you make regular repayments and never miss one this will probably benefit your credit score.
Having multiple loans at the same time may hurt your credit score. And debts like credit cards or personal loans can have a bigger impact than something like a home loan.
Button link: Tips to improve your credit score
Unsecured personal loans are offered both by large, traditional banks such as NAB, and non-bank lenders like OMM or Harmoney. Non-banks are governed by the same regulations as banks, so both are safe and secure options for your borrowing needs.
The key difference between a bank and a non-bank is that non-banks hold a credit licence and not a banking licence. This means that they cannot provide some banking services, such as taking deposits. If you prefer to do all your banking in the same place, you may want to stick to the banks.
Typically, non-banks offer more competitive rates, with lower set-up and ongoing fees. However, they may have fewer loan options compared to traditional banks. Non-banks can also be more flexible and may provide better, personalised service when compared to traditional banks.
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I have ad many loans. I have a great credit rating. Buf I have rstired and am on the pension
Am I still eligible for a loan
Thank you
Lynne Davis
Hi Lynne,
Your eligibility for a loan depends on a number of things, including your income. If you have enough income to support debt repayments, you may be approved.
Also, it could be worth contacting the National Debt Helpline for some guidance. They offer free debt support and debt restructuring and could help look into your situation and options moving forward. They are open 5 days a week – contact them on 1800 007 007 or visit https://ndh.org.au/
Hope this helps!
I require a personal loan to pay out trustee for Vesting interest in my property or they will sell leaving me homeless
The amount required is $13,000
I was discharged from bankruptcy 15th august last year
Hi Dennis,
You can apply for any of the unsecured loans on this page by selecting the green “go to site” button.
You may also want to look at some options for borrowers who have experienced bad credit in the past, here are some options:
https://www.finder.com.au/bad-credit-personal-loans
Best of luck!
I am on a disability pension and want to pay off my credit card and Centrelink loans. Can you advise me of the best way to get a loan for $1000 please
Hi Karen,
Thank you for leaving a comment.
If you are looking to pay off your credit card balance and Centrelink loan, you may consider applying for a personal loan for debt consolidation. According to our review, Centrelink can be classed as genuine income by some lenders and can be used as income to assess your serviceability for a debt consolidation loan. It’s important to calculate your repayments and find out if your lender accepts your types of income. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions. Hope this helps!
Cheers,
Reggie
Hi. I need a personal loan of 40k to pay off an existing loan and leave some to purchase a motorcycle. These sites are all just taking into consideration MY circumstances instead of the household income. My husband pays most things and I pay the existing loan and other insurance expenses etc. Who can I contact to get a loan which includes my household combined income?
Hi Colleen,
Thanks for getting in touch with Finder. I hope all is well with you. :)
I understand you’re looking for a lender that would consider your household income. Indeed, the majority of lenders would only assess your individual income primarily. However, we do have a page that lists lenders who provide personal loans on joint applications.
On that page, you will see a table that allows you to conveniently compare your options. You can compare according to the loan amount, fees, term payment, and so on. Once you have found the right one for you, click on the “Go to site” green button to learn more or initiate your application.
I hope this helps. Should you have further questions, please don’t hesitate to reach out again.
Have a wonderful day!
Cheers,
Joshua
am a starter in businesses and and i need loan $ 2500 to enable have the working capital and set up, am citizen of Kenya.. please advise
Hi Lilian,
Thanks for leaving a question on finder.
Unfortunately, the lenders featured on our website only caters to residents from the US, Australia, UK, Canada and New Zealand. You will have to check with your local lenders if you are not from those 5 countries I mentioned. Sorry about that.
Cheers,
Joel