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Compare Personal Loans
In this short guide to comparing personal loans, we introduce the main personal loan types in Australia. We’ll outline how you can compare loan features to find the most suitable product for your borrowing needs. Lastly, we look at eligibility criteria and give you some tips on how to get approved for a loan.
Personal loan comparisons
The easiest way to start comparing personal loans is to understand which of the broader categories you’re looking for. There are different products depending on whether or not you’d like to guarantee your loan using a personal asset:
Another way to streamline your personal loans comparison is to consider what kind of interest you would rather pay:
Comparing secured and unsecured personal loans
A secured loan requires you to put up an asset as a guarantee that you’ll make all your repayments. Often, secured loans will accept your property, vehicle, or term deposit as collateral. If you don’t stick to the agreed repayment schedule, your loan provider may seize or repossess your asset. They may then be able to sell this to make up the amount you owe.
Guaranteeing your loan makes it less risky for the lender to extend you finance. This means secured personal loans can sometimes come with larger loan amounts or lower interest rates than unsecured personal loans.
In contrast, an unsecured personal loan won’t require any form of collateral. You’ll be considered a greater risk to a credit provider, however. This means that compared to secured loans, they often come with higher interest rates.
Comparing fixed and variable interest personal loans
Personal loans with a fixed interest rate will charge you a predetermined total amount of interest. Each repayment you make will, therefore, typically be the same size. If market interest rates rise, you won’t have to pay any more than you agreed to. If they drop, you won’t be able to take advantage of the lowered rates, either. When you compare fixed rate personal loans, you might also find that fewer options offer a redraw facility.
Variable rate loans will involve you paying higher interest on your loan when market rates go up. If they fall, you may enjoy savings on your interest payments. This might make it a little trickier to budget. On the whole, however, there are often more variable rate personal loans with flexible repayment schedules. You might find it easier to make your repayments if they are due fortnightly, for instance.
Comparison of personal loan features
Once you’ve decided on a fixed vs. variable interest loans and secured vs. unsecured loans, you can compare personal loan features. Australian consumers enjoy a lot of choices when it comes to choosing between loan offers. In other words, there are many ways different loan features can add value and cater to your specific borrowing needs. Some of the features worth considering include:
When comparing personal loans, be aware that credit providers offer different maximum and minimum loan amounts. At the lower end of the scale, minimum amounts are commonly around $5,000. Maximum amounts for loans are usually around $100,000, although you’ll have a hard time finding unsecured loans for over $50,000. To save time and start comparing personal loans relevant to you, it’s highly advisable to use the filter. Filter your results to compare the most relevant loan provider for your borrowing needs.
Your loan term will impact the size of your repayments. Use our filter to refine your results and compare personal loans within your maximum and minimum ranges. Loan terms can vary broadly between 180-day terms and longer loan periods of 10 years. Most loan terms fall within the 2-5 year mark, but it’s best to check with your lender before you apply.
A redraw facility lets you make extra payments when you can, and ‘borrow’ (‘redraw’) from this extra payment if you need to later. Variable interest loans often provide a redraw facility, alongside a more expensive rate of interest. In comparison, fixed-rate loans often won’t permit you to redraw. Rather, they may offer a more competitive rate.
The flexibility a redraw facility offers can be helpful, especially if you’re hoping to pay off your debt early. Simultaneously, it provides some security if you later find you need to access your money.
Charges and fees
Under Australian law, you’ll always be allowed to pay your loan off early. What you’ll need to look for while doing your personal loans comparison is fees for early repayment.
How to compare personal loan repayments
Together, your loan amount, loan term, fees, and repayment schedule will dictate the size of your regular repayments.
Repayment schedules also vary depending on the provider you choose. The majority of lenders will let you pay each week, fortnight or month. If you choose a peer-to-peer lender, however, some will only let you repay on a monthly basis.
We’ve made it simple to calculate the size of your loan repayments using our personal loans repayment calculator. Adjust the filter so it reflects your loan term and amount – the calculator will calculate approximately how much you’ll need to pay monthly. Alongside this, you’ll also be able to see how this figure breaks down. It will show how much you’ll be paying in fees and interest. The repayment calculator is possibly one of the best tools at your disposal when you’re comparing personal loans.
Am I eligible for a personal loan?
Here are some of the most common eligibility criteria for Australian loans:
Age: You’ll typically have to be over either 18 or 21
Credit history: When you compare personal loans, you may notice some lenders offering higher or lower interest depending on whether your score is below average, average, good, or excellent. If you have no defaults in your credit history, this is a big plus. If you apply for finance a lot, this may damage your chances of being approved.
Employment: Sometimes a lender will extend you a loan only if you are in regular employment. Some will approve loans for people on benefits or a pension.
Income: As a minimum, somewhere in the range of $15,000 to $50,000 is most common
Financial circumstances: By looking at your salary alongside your liabilities, lenders can gauge whether you’re really in a position to repay the loan. A credit card which has a high limit might be viewed as a liability – even if you’ve no debts outstanding on it.
Australian citizenship: The majority of lenders loan money only to citizens or permanent residents. Some will approve those holding a valid visa, but only a few will approve loans for those on a 457 visa.
Applying for a personal loan
Whether or not you’ll be approved for a loan is based heavily on the extent to which you fulfill the eligibility criteria. It’s highly recommended you check our blog post on the amount you might be able to borrow and whether you’ll get approved. If you’ve got existing loans you’re struggling to repay and you think you won’t get approved, consider saving instead.
Things you may need to provide include:
- Proof of income or stable employment that the lender can verify using your employer’s details and copies of recent payslips.
If you are self-employed, supply your bank statements covering the past year. Provide your latest business or personal tax return. Both of these should be recent and from the past 18 months.
- Documents showing your expenses, liabilities, and assets.
- Recent financial statements from your bank dating back at least three months.
- Your passport or driver’s license as proof of identification.
How can I spend my loan?
Some restrictions may apply, so it’s good to ask the loan provider before making an application. Otherwise, this should be the easy part, for most people! Some of the most popular personal loan purposes include: