The lenders providing personal loan repayment relief during the coronavirus

The lenders providing personal loan repayment relief during the coronavirus

More than 20 personal loan lenders are providing some much-needed breathing room for borrowers during COVID-19.

The two main forms of relief for personal loan borrowers are allowing a repayment holiday for three to six months and discounting personal loan interest rates.

For many who have lost their jobs or seen their income reduced because of the coronavirus, pausing repayments in the medium-term may take the immediate pressure off their backs.

Interest capitalisation

As with any financial product, it’s important to read the fine print and in this case, there is a potential catch, namely interest capitalisation.

While repayments are essentially frozen during a repayment holiday, interest and fees are generally not and will continue to pile on top of on your loan balance. 

When repayments eventually resume, you could owe more total interest and face a bigger repayment bill in the long run. This means your lender may either bump up your minimum repayments to ensure the loan can still be paid within its term, or they may extend your loan term to make up for the missing time.

For those who are considering freezing their personal loan repayments, it could be in your best interest to restart repayments as soon as you are in a better financial standing. If possible, even making lower repayments could be a good start.

Before making any decisions, it may be best to consult a financial adviser who can give you advice on your personal situation.

RateCity has compiled a list of the lenders which are either pausing personal loan repayments for those affected by the pandemic or cutting its personal loan interest rates.

Read more: Which banks are freezing mortgages for COVID-19?

Read more: Which banks are offering relief on credit card repayments for COVID-19?

Lenders freezing personal loan repayments

Some banks may have prerequisites in place for allowing borrowers to take a repayment holiday. For example, the bank may only consider a borrower’s application to pause repayments if their loan is on a variable rate and if they are ahead of their repayments.

Interest capitalisation is also likely to apply to repayment deferral periods.

Contact your lender to find out more about its specific criteria for granting repayment holidays, as well as any terms and conditions.

Australian Unity – Customers may pause personal loan repayments for up to six months.

Australian Military Bank – Borrowers may pause repayments for up to six months.

Auswide Bank – Option to defer repayments for up to six months.

Bank First – Personal loan customers requesting financial assistance may be able to defer their repayments for up to three months.

Bank of us – Customers can apply for a payment deferral of up to six months.

Bankstown City Unity Bank – Borrowers may be able to defer loan repayments for an initial three-month period with a further three months available if required.

BankVic – Impacted members may apply to defer repayments for a period of up to six months.

Circle Alliance Bank – Payment relief on loans and other credit facilities for up to six months.

Endeavour Mutual Bank and Sydney Mutual Bank – Deferral of loan repayments for up to six months (with a three month checkpoint) for members in need.

Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank – Customers can contact bank to see if eligible for a three-month deferral.

Gateway Bank – Borrowers may defer repayments for up to three months.

HSBC – Customers may defer personal loan repayments for up to six months.

ING Bank – A three to six-month payment pause on home loans and personal loans for those in need, subject to financial assessment.

MOVE Bank – Option to defer loan repayments for up to three months. Will also waive establishment fees and prioritise the processing of personal loans if borrower is in need of emergency funds with establishment fees waived.

MyState Bank – Borrowers may have the option of deferring their personal loan repayments for up to six months, with a three-month checkpoint.

Newcastle Permanent – Personal loan customers can request a pause in repayments for up to six months, including a three-month checkpoint.

People’s Choice CU – Members facing financial difficulties due to the impacts of the coronavirus may pause repayments for up to six months, with a review after three months.

Qudos Bank – Customers may pause their personal loan repayments for up to six months.

RACQ – Borrowers may defer repayments on personal loans.

Unity Bank – Borrowers needing financial assistance at this time may defer loan repayments for an initial three-month period with a further three months available if required.

Warwick Credit Union – Personal loan customers can request support by way of deferring repayments for up to six months.

Lenders discounting personal loan rates

Some lenders have implemented different COVID-19 support measures which focus on helping people who may need extra funds to pay for rent and other living expenses during these tough times. Here are the lenders which have provided some form of discount to their personal loan rates.

Bendigo Adelaide Bank – Discounted interest rates on new personal loans taken out by existing Bendigo Bank customers.

G&C Mutual Bank – Borrowers can receive a 1.00% discount on their normal eligible Fair Rate Loan Tier in the next six months. No repayments required for the loan’s first three months.

Heritage Bank – Cutting personal loan rates by 0.25%, effective April 1.

Hume Bank – New unsecured personal loans will be made available to eligible customers at secured interest rates. – effective April 1.

IMB Bank – Personal line of credit interest rate reduced by 1.00% for new and existing customers – effective April 3.

Nova Alliance Bank – Discounted interest rates on new personal loans taken out by existing Nova Members.

QBANK – Car loans approved after March 27 will have its interest rate reduced by 0.50% per annum.

Qudos Bank – Automatically reducing existing customers’ variable personal loan and car loan rates by 0.10% per annum. New customers can also qualify for a rate discount of up to 0.10%. Application fees for personal loans will also be waved – effective April 2.

Service One Alliance – Discounted interest rates on new personal loans taken out by existing Service One members.

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Learn more about personal loans

Can I get a $4000 personal loan if I’m unemployed or on Centrelink?

Before most providers of personal loans or medium amount loans will approve an application, they’ll want to know you can afford the loan’s repayments on your current income without ending up in financial stress. Several lenders don’t count Centrelink benefits when assessing a borrower’s income for this purpose, so these borrowers may find it more difficult to be approved for a loan.

If you’re unemployed, self-employed, or if more than 50% of your income come from Centrelink, consider contacting a potential lender before applying to find out whether they accept borrowers on Centrelink.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

How long does it take to get a student personal loan?

Completing an online personal loan application can often take anywhere from 10 minutes to 1 hour. Depending on your lender, processing your personal loan application may take anywhere between 1 and 24 hours. If your personal loan application is approved, you may receive the money in your bank account the following business day, or, in some cases, the same day.

How can I get a $3000 loan approved?

Responsible lenders don’t have guaranteed approval for personal loans and medium amount loans, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income. Centrelink payments may not count, so you should check with the lender prior to making an application.

How long does it take to get a $5000 loan?

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.

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 self-employed personal loan with bad credit?

It may be much more difficult for a self-employed borrower to successfully apply for a personal loan if they also have bad credit. Many lenders already consider self-employed borrowers to be riskier than those in full-time employment, so some self-employed personal loans require borrowers to have excellent credit.

If you’re a self-employed borrower with a bad credit history, there may still be personal loan options available to you, such as securing your personal loan against a vehicle of equity in a property, though your interest rates may be higher than those of other borrowers. Consider contacting a lender before applying to discuss your options.

How are credit ratings/scores calculated?

Different credit reporting bodies may use different formulas to calculate credit scores. However, they use the same type of information: credit history and demographic profile.

They’re likely to look at how many credit applications you’ve made, which lender the applications were for, what purpose they were for, how much they were for and your repayment record. They’ll also look at your age and postcode. They’ll also look to see if you’ve had any bankruptcies or other relevant legal judgements against you.

Your score can change if your demographic profile changes or new information is added to your file (such as a new loan application) or existing information is removed from your file (i.e. because it has reached its expiry date).

Are there $2000 emergency loans?

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

What is comprehensive credit reporting?

Comprehensive credit reporting is a system which includes both positive and negative information on a person’s credit file. Before comprehensive credit reporting was introduced, only negative information was included.

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.

What documentation is needed for a self-employed personal loan?

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.

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.

Which lenders offer bad credit personal loans?

Several dozen lenders offer bad credit personal loans in Australia. These are generally smaller lenders that aren’t household names.