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Fixed up to 10.49%
Liberty Personal Loan (Excellent Credit History)
3 years to 7 years
Fixed up to 16.95%
Unsecured Personal Loans
1.5 years to 7 years
Fixed up to 9.99%
Low Rate Personal Loan - (Excellent Credit)
2 years to 3 years
Fixed up to 8.5%
Unsecured Personal Loan - (Excellent Credit)
Variable up to 9.99%
Personal Loan - Excellent Credit
1 year to 7 years
Discounted Personal Loan
1 year to 10 years
Discount Personal Loan
1 year to 7 years
Fixed up to 25.69%
Unsecured Personal Loan (Excellent Credit) (3 Year Term) (Amount > $5000)
Personal Loan Fixed
1 year to 7 years
Unsecured Personal Loan Fixed
1 year to 7 years
1 year to 7 years
Unsecured Personal Loan
1 year to 7 years
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Australia’s best personal loans for July 2020
If you’re aiming to clear your debts in the short-to-medium term, it might be worth considering consolidating your debts into one personal loan.
How do personal loans work?
In a personal loan, you borrow a sum of money to pay for a personal expense, then pay back this loan plus interest over time in a series of scheduled repayments.
Do personal loans work like home loans?
Personal loans work similarly to mortgages, in that they require the borrower to commit to making regular repayments over the loan term, and make steady progress towards paying back their debt plus interest.
However, personal loans tend to have shorter loan terms than home loans. Paying for your home or investment property often takes decades (25 to 30 years or more is common), while many personal loans are repaid much sooner. Some personal loans can run for a few years (often between one and five years), while others have terms of less than 12 months.
Do personal loans work like credit cards?
Most personal loans don’t work like credit cards. Here’s why:
If you have a personal loan…
- You borrow a set amount of money, which you receive in one lump sum at the start of the loan, and can’t borrow more later on.
- You are required to make regular repayments to make progress towards clearing your debt plus interest over time.
- You are charged interest on what you owe when you make each repayment.
- You can’t borrow more money later on as part of the same personal loan.
If you have a credit card...
- You can borrow any amount of money, up to your credit limit, at any time.
- You’re required to make regular minimum repayments (often very small ones), but aren’t required to completely clear your debt.
- Most credit cards have a number of interest-free days for new purchases – if you clear your balance before these days expire each repayment cycle (often monthly), you aren’t charged interest on what you owe.
How do Line of Credit Personal Loans work?
While many personal loans let you borrow money in one lump sum, some personal loans offer a flexible line of credit, which functions much like a credit card with a higher than average credit limit.
Borrowers often apply for line of credit personal loans if they require flexible access to finance to manage multiple smaller expenses over time, rather than one large lump sum.
While you’ll only be charged interest on what you borrow, rather than the full lump sum, there may be fees and charges involved, and much like a credit card, you may be tempted to spend more than you can easily afford to repay.
How do secured and unsecured personal loans work?
Secured personal loans are guaranteed by the value of an asset, such as a car or equity in a property. If you’re unable to pay back your loan and default on your repayments, your lender will be able to repossess and sell your asset to help cover their losses. Because this makes lending money less risky for the lender, secured personal loans often have lower interest rates.
Unsecured personal loans don’t require security, making them a potential option for borrowers unable or unwilling to provide an asset as collateral. However, they often have higher interest rates on average.
Do car loans work like personal loans?
Most car loans are a type of personal loan, structured specifically for vehicle finance.
It’s common for a car loan to be a secured personal loan, using the value of the vehicle you’re purchasing to guarantee the loan, which can help you enjoy a lower interest rate. Because secured loans often require the vehicle to retain enough value to cover the loan, they may be restricted to particular vehicle models, or vehicles under a certain age.
If you’re buying a car that doesn’t suit a secured car loan, there are also unsecured car loan, which offer greater flexibility but often have higher interest rates.
How do personal loan features work?
- Advertised rate – The interest you’ll pay on your loan
- Comparison rate – An indication of the loan’s total cost, including the interest and the standard fees and charges.
- Fixed rate – An interest rate that remains the same for the loan’s full term. Keeps repayments the same, for simpler budgeting.
- Variable rate – An interest rate that the lender may increase or decrease during your loan term. You may save money if the interest rate falls and your repayments decrease, though your loan may cost you more if the interest rate rises and your repayments increase.
- Redraw facility – If you make extra repayments onto your personal loan, you can redraw these from your loan if you need some of that money back again.
- Fully drawn advance – A loan where you receive he full lump sum at the start of the loan term.
- Early exit penalty fee – A fee that some lenders require the borrower to pay if they make enough extra repayments onto their loan to clear their debt ahead of schedule.
How does applying for a personal loan work?
- Compare personal loans based on your personal finances: Make sure you’re confident you can afford to repay a personal loan before you apply, and that its feature and benefits are suitable for your households’ needs.
- Check your eligibility: Most personal loans require you to be an Australian resident who’s over 18, has a steady income, and a good credit score. Some loans and lenders have more or less requirements – check before you apply.
- Collect your documents: You’ll usually need to provide ID and enough documentation to prove you fulfil the loan’s eligibility criteria.
- Apply, either online or by completing a paper application form: Your lender may take less than an hour to assess and approve your loan, or it may take a few business days, depending on your lender.
- Get your money: You may receive your funds on the same day of your loan’s approval, or it may take a few business days.
- Start making repayments: You may be able to pay monthly, fortnightly or weekly, which may better suit your income. Also, making extra repayments may help you clear the loan faster and pay less interest.
How do debt consolidation loans work?
If you have outstanding personal loans and/or unpaid credit cards, and are struggling to keep up with your payments, one option could be to apply for a debt consolidation loan. These personal loans let you borrow enough money to clear your other outstanding debts, effectively exchanging multiple smaller debts for a single combined debt. This means you’ll have just one loan repayment to manage, and you’ll only be charged interest on one loan, and at one rate.
Debt consolidation personal loans may not be suitable for every financial situation. Consider contacting a financial adviser before applying. The national debt helpline is another resource available to borrowers struggling with outstanding debts.
Senior Financial Writer
Mark Bristow is a senior financial writer for RateCity and an experienced analyst, researcher, and producer. Working for over ten years, Mark previously wrote and researched commercial real estate at CoreLogic, and has seen articles published at Lifehacker and Business Insider, among others. Most recently, Mark has joined RateCity working across finance as a whole. Whatever the topic, Mark’s goal is always to provide simple solutions to complex problems.
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It can be hard to improve your credit score, as it usually requires sacrifice and discipline, but hard doesn’t necessarily mean complicated. Some simple ways you can give your credit score a boost include closing extra credit cards, reducing your credit card limit, pay off any loans and make loan repayments on time.
As a general rule, the lower your credit score, the more remedies you can apply and the greater the scope for improvement.
Some lenders will consider personal loan applications from a borrower with bad credit if the borrower has a family member with good credit willing to guarantee the loan (a guarantor).
If the borrower fails to pay back their personal loan, it will be their guarantor’s responsibility to cover the repayments.
Personal loans may require a borrower to provide proof of identity, proof of residence, details of any other outstanding loans (including credit cards), details of assets they own (e.g. savings, car, property), and proof of income.
While borrowers in full-time or part-time employment can often provide payslips and similar documents to prove their income, self-employed borrowers may need to provide other documents, such as bank statements or tax returns, to demonstrate that their income can cover a loan’s repayments.
If you’re having trouble being approved for a loan of less than $2000 and urgently need to purchase household essentials, there may be emergency loan options available to you.
For example, the No Interest Loans Scheme (NILS) allows low-income borrowers to take out interest-free loans of up to $1500 for essential goods and services.
For further assistance, consider contacting a financial counsellor, or calling the National Debt Helpline on 1300 007 007
It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments.
If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan options. Consider contacting the lender before applying.
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
Many borrowers use quick loans to cover short-term or urgent costs, such as paying for car repairs, medical bills, or replacing broken appliances or electronics. Quick loans often have high interest rates compared with regular personal loans.
Before applying for a quick loan, consider your other available options, such as working out a payment plan or applying for an advance or extension.
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.
Depending on the lender, personal loans and medium-amount loans for $5000 can sometimes be approved in under an hour, and give you access to the money the same day. Other loans may take 24 hours or longer to assess your application, and you may not get the money for a few days.
If you need to borrow $2000 or less, alternatives to getting a personal loan or payday loan include using a credit card or the redraw facility of your home, car or personal loan.
Before you borrow $2000 on a credit card, remember that interest will continue being charged on what you owe until you clear your credit card balance. To minimise your interest, consider prioritising paying off your credit card.
Before you draw down $2000 in extra repayments from your home, car or personal loan using a redraw facility, note that fees and charges may apply, and drawing money from your loan may mean your loan will take longer to repay, costing you more in total interest.