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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Fact Checked -

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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Learn more about personal loans

Can you refinance a $5000 personal loan?

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.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Can unemployed single parents get personal loans?

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.

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.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

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 is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

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 much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

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.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

Where can I get a personal loan?

The Australian personal loans market contains dozens of lenders offering several hundred different products. Personal loans are available through a range of institutions, including:

There are three main ways to access personal loans. You can go through a comparison website, such as RateCity. You can use a finance broker. Or you can directly contact the lender.