What is a personal loan?

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A personal loan is a loan that generally has a lower value and shorter timeframe than a mortgage.

Some of the common reasons why people take out personal loans include:

  • Take a holiday
  • Buy a car
  • Retire credit card debt
  • Finance renovations
  • Pay for a wedding
  • Cope with sudden medical bills

Personal loans can be as low as several hundred dollars and rarely exceed $100,000.

Loan terms are at least 16 days and usually extend for up to two years, although they can be longer.

Personal loans can be either secured or unsecured. With a secured personal loan, the borrower offers a form of security, or collateral, which can be seized if the loan isn’t repaid. With an unsecured personal loan, no collateral is provided, although the borrower is charged a higher interest rate.

Australia’s personal loan market is very competitive, with dozens of lenders offering about 200 different loan products.

A good place to do your research is RateCity’s personal loan comparison page, where you can investigate interest rates, fees and features. That will allow you to make apples-for-apples comparisons and pick the personal loan that best suits your unique circumstances.

Personal lenders are regulated by the Australian Securities & Investments Commission (ASIC) and must abide by responsible lending obligations.

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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