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Learn more about personal loans

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.

Frequently asked questions

What are the pros and cons of personal loans?

The advantages of personal loans are that they’re easier to obtain than mortgages and usually have lower interest rates than credit cards.

One disadvantage with personal loans is that you have to go through a formal application process, unlike when you borrow money on your credit card. Another disadvantage is that you’ll be charged a higher interest rate than if you borrowed the money as part of a mortgage.

How long do personal loans take?

Depending on the lender, some personal loan applications can be approved in as little as one hour, or you may need to wait until the next business day. If approved, you may receive your money on the same day, the next business day, or within the week.

How are personal loans regulated?

Personal lenders in Australia are regulated by ASIC (the Australian Securities & Investments Commission) and must follow responsible lending rules. That means they can’t lend money without making “reasonable inquiries” about a borrower’s financial situation and ensuring the loan is “not unsuitable” for them.

Can I get a personal loan if I receive Centrelink payments?

It is hard, but not impossible, to qualify for a personal loan if you receive Centrelink payments.

Some lenders won’t lend money to people who are on welfare. However, other lenders will simply consider Centrelink payments as another factor to weigh up when they assess a person’s capacity to repay a loan. You should check with any prospective lender about their criteria before making a personal loan application.

Where can I get a personal loan?

The Australian personal loans market contains dozens of lenders offering several hundred different products. Personal loans are available through a range of institutions, including:

There are three main ways to access personal loans. You can go through a comparison website, such as RateCity. You can use a finance broker. Or you can directly contact the lender.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

Do student personal loans require security?

While some personal loans can be secured by the value of an asset, such as a car or equity in a property, student personal loans are often unsecured, which typically have higher interest rates.

Some lenders also offer guarantor personal loans to students. These loans have lower interest rates, as a guarantor (usually a relative of the borrower with good credit) will fully or partially guarantee the loan, taking on the financial responsibility if the borrower defaults.

What are the pros and cons of bad credit personal loans?

In some instances, bad credit personal loans can help people with bad credit history to consolidate their debts, which can help make it easier for them to clear those debts. This is because the borrower might be able to consolidate several debts with higher interest rates (such as credit card loans) into one single debt with a lower interest rate and potentially fewer fees.

However, this strategy can backfire if the borrower spends the loaned funds instead of using it to repay the new loan. Another disadvantage of bad credit personal loans is that they have higher interest rates than regular personal loans.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Can I get a no credit check personal loan?

Personal loans with no credit checks are available and called ‘payday loans’. These are sometimes used as short-term solutions for cash-strapped Australians. They often carry higher interest rates and fees than regular personal loans, and individuals risk putting themselves into a worsened cycle of debt.

Are there emergency loans with no credit checks?

While many personal loans require a credit check as part of the application process, some personal loans and payday loans have no credit checks, which may appeal to some borrowers with a bad credit score.

Keep in mind that even if a loan is available with no credit check, the lender will likely want to confirm that you can afford the repayments on your current income.

What is an unsecured bad credit personal loan?

A bad credit personal loan is ‘unsecured’ when the borrower doesn’t offer up an asset, such as a car or jewellery, as collateral or security. Lenders generally charge higher interest rates on unsecured loans than secured loans.

What can I use a bad credit personal loan for?

Generally, bad credit personal loans can be used for the following purposes:

  • Debt consolidation
  • Paying bills
  • Buying vehicles
  • Moving expenses
  • Holidays
  • Weddings
  • Education

Some lenders restrict how their bad credit personal loans can be used as part of their commitment to responsible lending – be sure to check before applying.

What do single parents need for a personal loan application?

Much like applying for other personal loans, applying for personal loans for single parents will likely require the following:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of assets (e.g. car, home)
  • Details of liabilities (e.g. credit cards, other loans)
  • Loan amount
  • Loan term

Can single mothers get personal loans online?

Many lenders offer online applications for personal loans, which can be convenient for borrowers who have busy lives. If you’re not confident your personal loan application will be approved, you may want to consider contacting the lender by email, live chat, phone, or by visiting a branch, to discuss your situation before applying.

Can I get a fast loan with bad credit?

Some lenders offer fast loans to borrowers with bad credit. Providers of small payday loans of up to $2000 or medium amount loans of up to $5000 may have no credit checks, though these lenders will usually want to confirm you can afford its loans on your income.

Are there low doc personal loans?

Self-employed borrowers may be eligible for low doc personal loans, which require less documentation in their application process than many other personal loan options.

It’s important to remember that though low doc personal loans may require less paperwork, you may need to provide additional security, or pay a higher interest rate.