What are all-purpose personal loans?
As the name suggests, all-purpose loans can be used to pay for whatever you like. Examples of the way you can use all-purpose personal loans include vehicles, holidays, debt consolidation and home improvements.
All-purpose personal loans work similarly to other types of personal loans where you apply to either a traditional or non-traditional lender and borrow a set amount of money that is paid back, with interest, over the life of the all-purpose personal loan.
While an all-purpose personal loan offers less flexibility and features than credit cards, the interest rates are generally lower, which means the loan may cost you less in the long run.
Who offers all-purpose personal loans?
Borrowers looking to take out all purpose personal loans will have a few options to compare. Depending on the amount you’re looking to borrow, your credit history and your relationship with your existing bank, both traditional lenders, like banks and credit unions, and non-traditional lenders, like online-only lenders, offer all-purpose personal loans. Features, fees and eligibility vary between lenders, so always compare your options when seeing who offers all-purpose personal loans.
How do you take out all-purpose personal loans?
Before you take out an all-purpose personal loan, start by researching all the different all-purpose personal loans on the market. Once you’ve found the right all-purpose personal loan, you can apply directly to the lender, or go through a comparison website or finance broker. Eligibility criteria vary from lender to lender, so be sure to read through them to make sure you qualify and have the supporting documents ready.
Can people with bad credit take out all-purpose personal loans?
People with bad credit histories may be able to take out all-purpose personal loans. As each lender has their lending criteria, borrowers with bad credit may find that some lenders are more generous than others.
While there are specific lenders that offer specialised loans to borrowers with bad credit, it’s worth mentioning that these all-purpose loans tend to have higher interest rates, fees and chargers. Before taking out all-purpose loans, borrowers with bad credit should always do their research and make sure they can afford to pay back the loan. Defaulting on an all-purpose personal loan when you’ve already got bad credit could make your situation worse.
How do you compare all-purpose personal loans?
With so many options, comparing all-purpose personal loans can be a challenge. Start by looking at whether you fit the eligibility criteria of the lender and that you can afford to repay the loan. Some lenders offer loan terms of between one and ten years, so compare to see how much you’d have to repay under different scenarios. Look out for additional features such as flexible repayment options, redraw and whether the all-purpose loan is secured or unsecured. Compare fees such as establishment fee, late payment fee, redraw fee or any penalties for early repayment.
What are the pros and cons of all-purpose personal loans?
As with any loans, all-purpose personal loans have a range of pros and cons, which should be assessed on a case-by-case basis.
One of the main advantages of all-purpose personal loans is the flexibility to use the funds how you want. Other types of personal loans may have restrictions on how the funds can be used, whereas all-purpose personal loans tend to have a lot more flexibility over how you use the loan. Depending on your situation, all-purpose personal loans usually have lower interest rates than credit cards.
Unlike borrowing money on a credit card, with all-purpose personal loans you will have to go through a formal application process. Depending on the amount you’re looking to borrow, borrowers who have a mortgage with a redraw facility may wish to explore that option as you may be charged a lower interest rate than if you borrowed the money as part of an all-purpose personal loan.