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What is a personal loan?

Nick Bendel avatar
Nick Bendel
- 2 min read
What is a personal loan?

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.

Disclaimer

This article is over two years old, last updated on October 13, 2017. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent personal loans articles.

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Product database updated 19 Mar, 2024