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Did you know you can compare 100’s of unsecured personal loans? Browse, filter and compare on our main personal loans comparison page.
What is an unsecured personal loan?
Unsecured personal loans can be a great way to fund a purchase that you might not be able to use your credit card for. Unlike secured personal loans, unsecured personal loans do not require you to guarantee the loan amount with a personal asset. unsecured personal loans are a great way to finance a variety of purchases, from a car and weddings to holidays or home renovations.
With secured loans, your lender is able to seize the collateral you’ve provided and sell it for repayment purposes if you default. Unsecured loans do not involve this at all, however they do come with very real repercussions should you fail to repay the loan. For example, your lender may sue you for the amount of the loan, and you may be required to sell a personal asset. Forced bankruptcy is also an unpleasant potential outcome of defaulting on an unsecured personal loan, so please consider your ability to repay on time if you’re looking at taking out a personal loan.
Key features of unsecured personal loans
There are several features you’ll need to acquaint yourself with if you’re planning to research the most suitable unsecured personal loan for you. The most important features to consider are:
- Interest rates. These are typically higher for unsecured personal loans than for their secured counterparts, as a loan without collateral is considered higher risk by the lender. Interest rates will also either be varied or fixed.
- Flexibility around additional repayments. unsecured personal loans can vary from rigid to flexible regarding whether they’ll allow you to make penalty-free additional repayments. Because extra repayments are a great way to pay off your unsecured personal loan faster, it’s generally a good thing if your loan provider allows this.
- Redraw facilities. Unsecured personal loans with redraw facilities allow you to make early repayments if you’re able, but redraw these additional repayments should the need arise.
Pros and cons of unsecured personal loans
As unsecured personal loan comes with freedom from having to provide collateral, which can be a big plus. On the down side, this often means you’ll be paying a less competitive interest rate. Also, it’s not unusual that you’ll find fewer unsecured personal loan options available on the market to choose between.
Unsecured personal loans: fixed vs variable interest rates
Unsecured personal loans with fixed-rate interest offer you security in the sense that interest rates will not fluctuate during your loan term. This means you’ll know exactly what your interest repayments will be in advance. Variable-rate unsecured personal loans will rise or fall with market interest rates. This can be great when interest rates are low, and not so great when they’re higher.
Comparison rates vs advertised rates for unsecured personal loans
Advertised rates for unsecured personal loans will only tell you the interest rates of different options when you’re shopping around. This is why they’ll always be lower than comparison rates, which are calculated a little differently.
Comparison rates for personal loans factor in the loan fees, loan amount and loan term into a more comprehensive picture of what you’ll really be looking at if you take out a certain unsecured personal loan option. They use 5 year loan figures for $30,000 or 3 years loan for $10,000 personal loans as a ‘standard’, that allows you to compare the market. This means that they won’t always be dead on, as all loans are different. However, they’re generally give a better estimate of what you’ll be paying in total than advertised rates.
Fees for unsecured personal loans
Depending on what offer you’ve chosen to go with, you may or may not be charged any of the following:
- set-up/establishment fees
- maintenance/ongoing fees
- prepayment/early repayment fees
- late repayment fees
- repayment redraw fees
Repayment amount for unsecured personal loans
The amount you repay monthly on your unsecured personal loan will vary depending on the exact offer you choose. Factors impacting this will include the interest rate type you’ve settled on, loan term, loan amount and various fees. It’s advisable to calculate repayments from fees and interest first, to figure out whether repayments on a personal loan offer are going to be manageable for you.
Unsecured personal loan amounts
Unsecured personal loan amounts vary greatly, so what you’re probably better off considering are things like your personal credit standing and what you’ll need the loan for. Providers also differ greatly in what they’ll consider lending you, so do look around before giving up or settling for a certain deal. One lender may be happy to extend you $15,000, for instance, while another will only be happy to lend you $9,000.
Credit cards vs. unsecured personal loans
The first difference between the two will, in most cases, be interest rate. Credit cards generally charge much higher interest, though they do offer you freedom from following a defined repayment schedule. At the same time, we’ve noted a few things that you might want to look at in a little more detail, like the differences between using credit cards and personal loans as lines of credit. We’ve covered these things too in our other articles, so you’ll feel fully prepared with an understanding of the basic facts when starting your research for the perfect unsecured personal loan.
Need an unsecured personal loans repayment calculator?
Use the filter to adjust your loan amount and term duration to calculate your approximate monthly repayments. When you apply the filter, you will see a breakdown of your approximate monthly repayments as well as the total amount of interest and fees paid.
How to apply for an unsecured personal loan ?
If you’d like to apply online for an unsecured personal loan , just scroll up and click on “GO TO SITE” to be taken to a secure unsecured form. Before you apply, be sure to learn about the lender’s fees and eligibility criteria. The ease of application varies between lenders, so give yourself around 30 minutes to complete the application.
What are the unsecured personal loan eligibility criteria?
Before you apply for an unsecured personal loan, be sure to understand and meet the lender’s lending criteria. Below is a high-level overview of eligibility criterias that may impact your chances of being approved for a personal loan:
Minimum requirements for an unsecured personal loan
- Minimum age: Range is between 18-21 years of age
- Minimum income: Range is between $15,000 and $50,000
- Employment status: This varies between lenders, some lender will lend to those on a pension or on benefits, whilst others require that you’re regularly employed
- Residency: (Most lenders require you to be an Australian citizen, permanent resident or have a valid visa). A handful of lender allow 457 visa holders to apply
- Credit score: Some lenders vary their interest rates based on whether you have an excellent, good, average or below average score
- Affordability: Lenders will look at your current income minus your outgoing expenses to determine if you have enough left over to repay the amount you wish to borrow
How much can you borrow?
This will depend greatly on your eligibility criteria. We strongly recommend reading this blog on how much you can borrow and whether or not you will be approved.
Information you’ll need to provide
Whether at the branch or online, make sure to have the following nearby:
- Proof of income: A verifiable and steady employment. You may be required to provide copies of your most recent pay slips and employer’s contact information
- A list of your assets, expenses and liabilities
- Identification Documents: Driver’s licence (if you have one) or other forms of ID
- Recent bank statements, going up to 3 months back
Are you self-employed?
If you’re self-employed, you will also need to provide:
- Financial statements for the last year (no older than 18 months)
- Your most recent personal/business tax return (no older than 18 months)
Other things to keeping mind when applying for an unsecured personal loan
- It’s advantageous to have a good credit history. For example, you have no recent defaults and no frequent requests for credit.
- Credit cards with large credit limits are seen as liabilities, even if there’s nothing owing. If you have existing liabilities, be certain you can pay them off in addition to your unsecured personal loan.
There are many additional factors to consider when completing your application, but the above are the most important. If you feel like you may not meet the lender’s eligibility criteria, it may be best to save!
What can you use an unsecured personal loan for?
With many lenders, you can borrow for almost any worthwhile purpose. No, going to the casino and putting it all on black is not a worthwhile purpose. If you’re not certain, it may be worthwhile contacting the lender before you apply.
Examples of common loan purpose will lend for:
Additional product information
Minimum and maximum unsecured personal loan amounts and terms
Minimum and maximum loan terms and amounts vary between lenders. We strongly recommend you use the filter to determine the most appropriate lender for you. Most common minimum loan amounts start from $5,000 with maximum terms up to $100,000. However, most lenders will not provide unsecured Unsecured personal loans beyond $50,000.
Terms range from 6 months to 10 years, with most common terms ranging between 2 and 5 years. You should however check the minimum and maximum term ranges for your preferred lender before applying.
It’s also worth checking to see if there are early repayment fees.
Most lenders allow weekly, fortnightly or monthly repayment. However, some peer-to-peer lenders only allow monthly repayments.
Extra repayment or early penalties
All lenders allow you to repay off your unsecured personal loan early, however – you should check each product for any potential early repayment fees.
Not all lenders allow you to redraw on your repayments. Some lenders only allow you to redraw on additional repayments you’ve made, whilst other do not allow redraw at all. Often (but not always) you will find fixed unsecured personal loans will not allow redraw, but offer a lower rate, whilst variable rate unsecured personal loans may allow you to redraw additional repayments you have made, but may also charge a higher interest rate.