How to make a personal loan useful over the summer

How to make a personal loan useful over the summer

The summer holidays often give us the gift of a little extra time and a bit of enthusiastic new year motivation. Which is why it might just be the perfect opportunity to get stuck into some of the items on your ever-growing to-do list.

If you’re eager to make the most of your time off but don’t have quite enough cash in the bank, you might find that a personal loan could come in handy right when you need it. Lenders offer personal loans for an abundance of loan purposes, so there’s every chance you could find one that’s right for you.

RateCity’s database offers plenty of competitive personal loans with rates currently starting from 5.35 per cent (6.21 per cent comparison rate), available to eligible borrowers for any worthwhile purpose.

We’ve put together a list of things that a personal loan might be able to help you out with this summer so you can start the new year off with a bang.

Tackling a renovation project

It’s safe to say we’ve all spent a lot more time at home this year than we likely normally do. Which means you’ve probably also had more time to notice a thing or two within your space that could do with an update.

Whether it’s a complete kitchen remodel that you’re after or the interiors just need a fresh lick of paint, a personal loan could be a viable option to get the project underway.

Reducing your carbon footprint

Speaking of renovating your home, if you’re looking to make updates of the eco-friendly variety, you might be interested to learn that there’s a specific type of personal loan for that purpose.

A green personal loan is a financial product designed to fund projects that are considered to be environmentally sustainable – such as installing solar panels or investing in energy efficient white goods.

Green personal loans also often have more competitive interest rates than regular personal loans, as lenders incentivise borrowers to ‘go green’. RateCity’s database offers green personal loans with rates currently starting from as little as 4.69 per cent (4.69 per cent comparison rate).

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Consolidating your debts

Having financial goals set for the new year is always a good idea, especially when it comes to paying down debt. If you’ve got more credit cards in your wallet than you’d like – plus maybe an existing personal loan or car loan on top of that – you could consider consolidating all of your debts into a single personal loan.

A debt consolidation personal loan could help you save money on interest charges as personal loans typically offer lower interest rates than credit cards. It could also help you avoid paying multiple account fees and make your budgeting more manageable with a single repayment.

When considering a debt consolidation loan, be sure to factor in additional charges such as break fees and establishment fees when calculating whether it’s the right move for you.

Taking a break

With state and territory COVID-19 border restrictions easing in recent weeks, it could be the perfect time to take the family on a much-anticipated holiday.

Taking out a personal loan to fund your trip could allow you to spend your time off how you like. And if it’s a relatively inexpensive getaway, you might be able to choose a shorter loan term in order to pay it off quickly.

Locking in your wedding plans

The emergence of the coronavirus pandemic might’ve put a stop to your wedding planning, but the gradual easing of restrictions could have you feeling confident enough to get back on track.

If you want to secure your first pick of wedding vendors, you’ll typically need to get in early. This generally means paying deposits well ahead of your big day, and potentially also before you’ve managed to build up enough savings. A personal loan could help with these early expenses, as well as other costs along the way, and ensure your nuptials are celebrated exactly how you envisioned.

If you are considering making use of a personal loan this summer, be sure to do your due diligence and ensure it’s the right choice for you. Search and compare your options, and consider speaking to a financial advisor for information specific to your personal circumstances.

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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.

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.

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.

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.

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.

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.

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.

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.

What do single parents need for a personal loan application?

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

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.

What are the pros and cons of debt consolidation?

In some instances, debt consolidation can help borrowers reduce their repayments or simplify them. For example, someone might take out a $7,000 personal loan at an interest rate of 8 per cent so they can repay an existing $4,000 personal loan at 10 per cent and a $3,000 credit card loan at 20 per cent.

However, debt consolidation can backfire if the borrower spends the extra money instead of using it to repay the new loan.

Can I get a bad credit personal loan with a guarantor?

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.

What are the Westpac personal loan eligibility criteria?

The process to apply for a personal loan from Westpac is simple and can be done online. To be eligible for a Westpac Bank personal loan, you must meet the eligibility criteria. These include:

  • You should be over 18 years old
  • You must be a permanent resident or hold a valid visa with confirmed employment in Australia
  • You should earn a regular and permanent income of at least $35,000 before taxes

If you feel you meet these eligibility criteria, you can apply for a personal loan with Westpac. With your application form, you’ll also have to submit the following documents:

  • Personal details including name, contact information, and residential address 
  • Proof of identity such as drivers licence or passport details
  • If you’re self-employed, you’ll need a list of assets, savings, investments, and liabilities as well as your most recent tax return information
  • If you’re an employee you’ll need to submit information related to your employment and finances like bank statements and payslips

Westpac Australia personal loans are available for amounts from $4,000 up to $50,000 and loan terms of up to seven years.