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Non-bank lenders’ personal loans

If you automatically think about personal loans being supplied by Australian banks you should know it’s possible, and sometimes better value, to also consider a non-bank lenders’ personal loan.

What are non-bank lenders’ personal loans?

Since the banking industry was deregulated in the 1980s competition increased and lower interest rates on personal loans offered by non-bank lending organisations forced many banks to lower their own interest rates. All this is good news for you, the customer, as you have increased choice when seeking a personal loan. Often non-bank lenders’ personal loans offer an excellent alternative to banking institutions. They are still required to conform to the same regulations and rules as banks.

Why do people use non-bank lenders’ personal loans?

There are a number of reasons why you might want to apply for a non-bank lenders’ personal loan:

  • You would like to be able to take out a personal loan without any associated credit card or transaction account;
  • You like the fact that non-bank lenders can be more flexible when it comes to charging fees and setting rates, which can work to your advantage;
  • Non-bank lenders work proactively to minimise overheads and keep costs down, for example some non-bank lenders do not have branches to service, and often these savings benefit you, the borrower;
  • Many people think a non-bank lender provides a better service to the customer than a traditional bank.

What are the main features?

Individual non-bank lenders offer different products, so it’s always best to make enquiries about features such as whether the institution makes charges if you pay your personal loan off early and whether they allow you to make flexible repayments. Check if you can make interest only payments if this is attractive to you and whether there are rules applying to the purpose of your personal loan. Some non-bank lenders offer redraw facilities however they may charge you for this.

What are the pros and cons of non-bank lenders’ personal loans?

Undoubtedly applying for a non-bank lender personal loan is useful for you as a customer, as you will generally have a better, more flexible and personalised customer service if you are with a smaller institution. Remember you are not taking a bigger risk by going to a non-bank lender because they are governed by the same regulations as traditional banks. 

You can compare a variety of personal loan offers from non-bank lenders just as you would compare standard bank loans. Always check that interest rates quoted are for the same amount and over the same period when making your choice. The same is true when it comes to checking fees for application and settlement, and look out for any additional charges such as an annual or monthly fee.

Non-bank lenders tend to focus on a smaller number of products than banks, so you are unlikely to get access to additional linked items such as a credit card or everyday account.


The worse your credit history, the harder you will find it to consolidate your debts, because lenders will be less willing to lend you money and will charge you higher interest rates.

However, people with bad credit histories can make debt consolidation work by following this three-step process. First, find a lender willing to give you a bad credit personal loan – this process will be simplified if you go through a mortgage broker or use a comparison website like RateCity. Second, make sure the interest repayments on your new loan are less than the repayments on the loans being replaced. Third, instead of spending those savings, use them to repay the new loan.


^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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