A personal loan is when you borrow money from a lender that must be repaid with interest in regular instalments over a set period, usually between three and five years. Personal loans can be used to buy cars, consolidate debt, pay for holidays and other larger expenses.
 
Many personal loans will allow you to borrow between $1,000 and $50,000. In some cases, you may be able to borrow up to $100,000. 

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9.99%

Fixed

11.22%

Latitude Financial Services

$645

36 months

2 years to 7 years

3.14

/ 5
More details

5.75%

Variable up to 9.99%

6.47%

Symple Loans

$606

36 months

1 year to 7 years

4.27

/ 5
More details

8.50%

Fixed

9.36%

Wisr

$631

36 months

3 years

3.52

/ 5
More details

12.45%

Fixed

13.32%

ANZ

$669

36 months

1 year to 7 years

2.94

/ 5
More details

12.69%

Variable

13.56%

NAB

$671

36 months

1 year to 7 years

3.06

/ 5
More details

4.94%

Variable

7.41%

Heritage Bank

$599

36 months

1 year to 10 years

4.50

/ 5
More details

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Learn more about personal loans

What can I use a personal loan for?

How do personal loans work?

After your personal loan application has been approved, you'll usually receive the money as one lump sum. You’ll need to pay this money back, plus interest, over the term of your loan. 

The main steps to get a personal loan are:

  1. Application: When you apply for a personal loan, you'll need to show proof of income, bank statements and personal identification. If you’re applying for a secured loan, you’ll also need to provide details of your security asset.
  2. Assessment: The lender will look at your personal finances to work out if you can afford the loan.
  3. Credit check: Responsible Australian lenders perform credit checks whenever someone applies for a loan. These checks help lenders work out if you’re a responsible borrower. They may also help determine your personalised interest rate.
  4. Contract: Once your application has been approved, you’ll be asked to sign a personal loan contract. This confirms the length of your loan, the type of loan, and that you understand the fees involved.
  5. Repayment: Some personal loans will let you choose weekly, fortnightly or monthly repayments, to better suit your budget.

What types of personal loans are available?

Not every type of personal loan will suit your specific financial situation. Here is a table to help you understand the pros and cons of each type of personal loan before deciding which one to sign up for. 

Type of personal loan What to consider
Fixed rate personal loan
  • Good for budgeting - stable payments from month to month
  • No risk of repayments increasing due to interest rate rises
  • May miss out on savings from interest rate cuts
Variable rate personal loan
  • Tend to be more flexible
  • You can save money if interest rates fall
  • Repayments may increase if interest rates rise
Secured personal loan
  • Often lower interest rates
  • Seen as a lower risk to lenders as an asset is used as security against the loan
  • May allow you to borrow more money
  • For car loans - lender may only accept new models as security
Unsecured personal loan
  • Don’t risk losing your security if you default
  • Application can be simpler
  • May mean higher interest rates and/or a smaller loan amount than a secured loan

What fees are involved with personal loans?

A personal loan with a low interest rate that charges high fees may turn out to be more expensive than a personal loan with a high interest rate and low fees.

Personal loan fees could include:

  • Upfront costs – establishment fees or application fees
  • Ongoing fees – annual fees and/or monthly fees
  • Late payment fees – if you miss a payment
  • Extra repayment fees – some lenders charge fees for paying more onto your loan

When you compare personal loans, check the comparison rate to get a better idea of the loan’s total cost. The comparison rate combines a loan’s interest rate and standard charges into a single percentage. However, a loan’s comparison rate may not include its non-standard fees and other costs. 

How much does a personal loan cost?

 

To work out your interest costs, it's a good idea to use a personal loan calculator. Check different repayment scenarios, with different interest rates, loan terms and loan amounts.
 
For example, here's how much a $20,000 personal loan might cost:

Loan term Interest rate Monthly repayments Total repayments
3 years 8% $627 $22,562
3 years 10% $645 $23,232
3 years 12% $664 $23,914
5 years 8% $406 $24,332
5 years 10% $425 $25,496
5 years 12% $445 $26,693

Source: MoneySmart

You’ll also need to think about upfront and ongoing fees. Upfront fees can range from $0 to $700, while ongoing fees can set you back up to $15 per month.

What personal loan term should I choose?

Type of personal loan Average length of loan What to consider
Shorter term personal loan Under 12 months
  • Can be paid off more quickly
  • Monthly repayments may be higher
Typical personal loan 3 - 5 years
  • Lower interest rate than a credit card
  • May cost you in fees and/or interest
Longer term personal loan 7 - 10 years
  • More affordable monthly repayments
  • Pay more interest over time

Can I refinance a personal loan?

If you find a more competitive personal loan, or if you want to consolidate your debts, you could refinance your personal loan. Note that the lender may charge you a break fee if you refinance.

To refinance a personal loan, follow these steps:

  1. Check your credit score, as it may have changed while paying off your existing loan.
  2. Compare personal loans to find a more competitive option.
  3. Calculate refinancing costs (break fees, application fees etc).
  4. Apply for the new personal loan.
  5. Ensure your old loan is paid off.

What do I need to prepare before applying for a personal loan?

To apply for a personal loan, most lenders will require that you:

  • are at least 18 years old
  • are an Australian citizen, permanent resident or have a valid visa
  • are employed or receive regular income
  • earn a minimum income (dependent on lender)
  • have a good credit rating

When you make a personal loan application, you’ll typically need to provide:

  • Proof of identity (driver’s licence, passport etc.)
  • Proof of income and employment (payslips, tax information)
  • Details of any other financial commitments
  • Details of additional assets (particularly for secured loans)

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Frequently asked questions

What is a credit rating/score?

Your credit rating/score is a number that summarises how credit-worthy you are based on your credit history.

The lower your score, the more likely you are to be denied a loan or forced to pay a higher interest rate.

How can I get a $3000 loan approved?

Personal loans and medium amount loans from responsible lenders don’t have guaranteed approval, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income (Centrelink payments may not count – so you should check with the lender prior to making an application).

How do you get a bad credit personal loan?

You can get a bad credit personal loan by applying directly to a lender, by going through a mortgage broker or by using a comparison website like RateCity.

When was comprehensive credit reporting introduced?

Comprehensive credit reporting was introduced to make credit reports fairer and more accurate. Under the previous system, credit providers only saw negative information about potential borrowers. Now, they get to see both positive and negative information, which means that credit providers can see if a borrower’s negative credit behaviour is typical or a one-off.

Can I get a fast loan with bad credit?

Some lenders offer fast loans to borrowers with bad credit. Providers of small payday loans of up to $2000 or medium amount loans of up to $5000 may have no credit checks, though these lenders will usually want to confirm you can afford their loans on your income.

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

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, without worrying about ending up out of pocket 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.

How are personal loans regulated?

Personal lenders are regulated by ASIC (the Australian Securities & Investments Commission) and must follow responsible lending rules. That means they can’t lend money without making “reasonable inquiries” about a borrower’s financial situation and ensuring the loan is “not unsuitable” for them.

Can you refinance a $5000 personal loan?

Many personal loans, much like home 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 comprehensive credit reporting?

Comprehensive credit reporting means including both positive and negative information on a person’s credit file. Before comprehensive credit reporting was introduced, only negative information was included.

How can I improve my credit rating/score?

Your credit score will improve if you demonstrate that you’ve become more credit-worthy. You can do that by minimising credit applications, clearing up defaults and paying bills on time.

Another tip is to get the one free credit report you’re entitled to each year – that way, you’ll be able to identify and fix any errors.

If you want to fix an error, the first thing you should do is speak with the credit reporting body, which make take of the problem or contact credit providers on your behalf.

The next step would be to contact your credit provider. If that doesn’t work, you can refer the matter to the credit provider’s independent dispute resolution scheme, which would be the Australian Financial Complaints Authority (AFCA).

AFCA provides consumers and small businesses with fair, free and independent dispute resolution for financial complaints.

If that doesn’t work, your final options are to contact the Privacy Commissioner and then the Office of the Information Commissioner.

What causes bad credit history?

Bad credit history is caused by filing for bankruptcy, defaulting on your debts, falling behind on your repayments and having loan applications rejected. Lenders are wary of borrowers who demonstrate this sort of behaviour, because it suggests they might struggle to repay future loans.

What is bad credit?

A person is deemed to have ‘bad credit’ when they have a poor history of repaying debts.

Can I get a $2000 loan on Centrelink?

If more than half of your income comes from Centrelink benefits, it may be more difficult to have a $2000 loan application approved. Many lenders will check if you can afford a loan’s repayments on the income from your job before they’ll approve an application, and many won’t count Centrelink payments when assessing your income for this purpose.

Some lenders will offer $2000 loans to borrowers on Centrelink – consider contacting potential lenders to check before applying.

How long will I have bad credit?

Most negative events that appear on a personal’s credit file will stay in their credit history for up to seven years.

You may be able to improve your credit score by correcting errors in your credit report, clearing outstanding debts, and maintaining good financial habits over time.

How much can I borrow with a personal loan?

It’s unusual for a lender to make a personal loan above $100,000, although there is no formal limit. As with all lending products, each lender sets its own policies, while each borrower is assessed on a case-by-case basis.

Can I get an easy/instant personal loan?

Some lenders are able to approve applications over the internet and within minutes. However, there is a catch. People who take out easy/instant loans generally pay higher interest rates and are restricted to lower amounts than people who follow a traditional borrowing process.

What interest rates are charged for personal loans?

Lenders aren’t allowed to charge interest on loans of $2,000 and under. Instead, they make their money by charging a one-off establishment fee of up to 20 per cent and a monthly account-keeping fee of up to four per cent. Lenders might also ask you to pay a government fee.

For loans between $2,001 and $5,000, lenders can make their money in only two ways: a one-off fee of $400 and annual interest rates of up to 48 per cent.

For loans of $5,001 and above, or for loans that have terms longer than two years, lenders can charge annual interest rates of up to 48 per cent. (Those fee caps don’t apply to loans offered by authorised deposit-taking institutions such as banks, building societies or credit unions – although such institutions are highly unlikely to charge interest rates of anywhere near 48 per cent.)

Who calculates your credit rating/score?

Credit ratings/scores are calculated by credit reporting bodies. The main bodies are Equifax, Dun & Bradstreet, Experian and the Tasmanian Collection Service.

What are the pros and cons of personal loans?

The advantages of personal loans are that they’re easier to obtain than mortgages and usually have lower interest rates than credit cards.

One disadvantage with personal loans is that you have to go through a formal application process, unlike when you borrow money on your credit card. Another disadvantage is that you’ll be charged a higher interest rate than if you borrowed the money as part of a mortgage.