Good or bad credit? Certain financial institutions have made it possible to qualify for a personal loan despite your credit rating.
Personal loans are widely taken out to finance all kinds of family expenses, such as house renovations, wedding costs, birthdays, vacations and sometimes to buy a piece of land. In addition, borrowers rely on these loans to consolidate debt, as interest rates are more affordable than those charged on credit cards, notably for individuals with strong or excellent creditworthiness.
You can obtain one of these loans through traditional banks, financial cooperatives and Internet lending sites that simplify online applications, eliminating the hassle of going to a financial institution.
“In many cases, the funding of personal loans can be completed as quickly as possible, so you won’t be waiting too long to receive your needed money.” – Eric Vilonico, credit analyst at Macquarie Bank Limited.
By far outperforming the competition, the top personal loans feature affordable interest rates to eligible borrowers, flexible lending amounts and payback terms, and minimal fees.
How can personal loans be compared?
To shop for the best offer, it’s essential to compare all products valid for personal loans. The tables we provide easily compare interest rates and costs from leading Australian lenders to determine which loan is best for you. Consider the following:
- Projected loan amount. How much money will the lender allow you to borrow – is it sufficient to reach your goals?
- Duration of the loan. How long can you expect the loan to last, at least and at most? Usually, durations within the range of 1 to 7 years are obtainable. A longer term means you’ll be paying more interest, but your monthly repayments will be lower.
- Costs. Consider upfront fees like origination or the application fee and recurring annual or monthly fees.
- The rate of interest. Does it feature a fixed or variable rate? In comparison to other alternatives in the market, how competitive is the rate?
- Financial capacity. Once you have determined the amount and length of your loan, you should use a repayment calculator to determine if your financial situation makes regular repayments possible.
- Reimbursements. Could you opt for payback on a weekly, bi-weekly or monthly basis? Can you give additional repayments without incurring any penalty or fee? Can the entire loan be repaid earlier than scheduled without penalty?
- Key features. Some of them, like an easy payoff, can help you save cash throughout your loan period, while other features, like a well-designed app, can significantly impact liveability.
What makes a reasonable rate?
Getting a reasonable rate will vary depending on your budget and creditworthiness, but an advantageous offer involves more than just a cheap rate.
“An advantageous offer also takes into account the terms and conditions of the loan, as well as any fees or hidden costs. Don’t just focus on the rate – make sure you understand the full picture before making a financial decision.” – Marc Lavigno, credit agent at AMP Bank.
When shopping around for personal loans in Australia, think carefully about these questions:
Does it offer any interest rate advantages?
If your credit rating is satisfactory, a competitive rate is between 6% and 9% on an annual basis. This range is only indicative and may differ according to your requirements and current economic situation.
How much will it cost?
It would be best if you looked at ongoing charges as well as those applied at the beginning of your loan. Recurring fees include those associated with the application or set-up of the loan. In contrast, the annual and monthly fees are recurring, with termination fees due upon completion of the loan. There may be charges for using extra loan features as well. Speak to the lender to find out what the applicable fees are and if fee waivers are allowed.
Is there flexibility in this kind of loan?
At what pace can you meet repayments? Do you have the option of paying additional amounts or prepaying the loan with no penalties? If you choose to prepay, is it possible to restructure the loan?
“Some lending terms are not as flexible as others, especially when it comes to the method of repayment, so start by asking the questions right away.” – Jenny Mallot, branch director at Westpac.
Is the time allowed for repayment reasonable?
In general, the duration of personal loans varies from 1 to 7 years, but others are shorter. Some providers apply more restrictive terms regarding the length of repayment than others. For example, they only offer terms of less than five years. Be careful to choose loan terms that fit your situation. Loans longer than seven years may allow you to reduce your repayments, but the interest you will pay during that time will be higher.
What kind of features do they include?
Some of the following features make a loan stand out from the rest. Suppose you value flexibility in your financial resources, for example. In that case, the ability to have a repayment mechanism allows you to make additional payments on your loan, reducing your interest payments while still having the ability to withdraw those additional payments if you need funds again. Other features include the presence of physical branches to go to or a user-friendly app for your loan repayment and tracking.
How do you differentiate between a personal loan from a credit union and one from a bank?
The difference between credit unions and banks is that they run on a not-for-profit basis. Usually, you will have lower costs and fees for a loan from a credit union, which implies that the lending rate may be lower. They are subject to the same regulatory requirements as banks, so applying for a personal loan is just as safe.
How long will it take to receive the funds?
Depending on the lender, the time it takes to transfer the borrowed amount varies, but it usually takes a couple of business days after the loan’s approval. There are banks that can provide their existing customers with a personal loan on the same day.
“Specific payday lenders can disburse the loan amount to new clients as early as one hour after approval. However, there are particular risks associated with these loans, such as increased interest rates and costs.” – Jean Langois, certified practising accountant at Langois Accounting.
Which amount can I get?
The amount you can borrow will vary depending on your loan type. The maximum limit for the majority of unsecured loans is $50,000, whereas secured ones can be as high as $100,000. This amount will be determined by a series of criteria, including your creditworthiness and credit rating.
Personal loans are recurring payments or lines of credit in a lump sum, usually ranging from $2,000 to $100,000, which you pay off within 7 years. Its interest rate may be fixed (an equal amount every month) or variable (a rate set by the bank that may change during the term of the loan).
The uses of personal loans are various, but people are inclined to get them for more costly one-time purchases, such as buying an automobile, wedding expenses, renovations or covering urgent bills. They can also consolidate several other debts (like credit cards) to create one debt and one repayment plan.
Disclaimer : All loans and credit cards are subject to credit and underwriting approval. ConsumersAware.org is an information blog and a search platform, not a lender. ConsumersAware.org only works with advertiser partners and networks that comply with laws and regulations of Canada, United Kingdom, United States, Australia, and New Zealand. Credit cards range from $500 to $50,000 with Annual percentage rates (APRs) range from 12.5% to 19.9% and depend on the assessment of your credit profile. Loans range from $500 to $50,000 with terms ranging from 12 months to 60 months or more. Loans APRs range from 5.99% to 29.8% and depend on the assessment of your credit profile. For example, for a $7,500 loan paid monthly over 24 months, a person would pay $332.40 per month for a total of $7,977.60 over the course of the entire loan period.
