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.