Which personal loans Australia is right for you? Securing one for a current specific need you have should not be a hassle especially if you are in good credit standing. Aussies apply for a personal loan for different reasons. This can either satisfy an urgent financial need, purchase a car, pay for medications, buy a boat or acquire a gadget. Thankfully, with Intellichoice, you do not have to worry about the time-consuming process and the amount of paperwork. Intellichoice Finance Personal Loans specialists will help you secure a personal loan fast, secure and easy.
Personal loans can help you solve a few financial needs such as
- Moving into a new house
- Rental bond payments
- Emergency expenses
- Additional cash for renovation
- Funding for your dream vacation
- Papering yourself or your loved one
- Buying a new gadget or appliance
- Consolidating debt
Personal Loan Definition
A personal loan is an amount of money, borrowed from a bank, lender or financial institution, used to cover personal expenses, that is returned in regular increments together with an interest rate as monthly fees added to the principal amount.
They can be considered as one of the straightforward financial products available for Aussies out there. Personal loans are very advantageous and cheaper alternatives than credit cards. It also gives you enough time to repay the loan. You can prepare for the repayment since its scheduled regularly. Some personal loans even allow you to make extra payments, thus shorten your loan term and the overall cost of your loan.
There are two types of personal loans, secured loans, and unsecured loans.
Unsecured Loans vs Secured Loans
A secured loan is simply guaranteed with an asset. Such can be a car for a car loan or any kind of asset that secures a debt. You provide an item that can be later be seized or sometimes sold by your bank or lender if you fail in repaying your loan.
Unsecured personal loans do not require security for your debt. The loan is still subjected to your ability to pay and failure to do gives the lender the right to act and bring the issue to court. And since the lender will be having a higher risk of losing money to the client, the interest rates for unsecured personal loans are higher compared to secured personal loans. Rate and fees differ, depending on the type of personal loan you will apply for.
You should ask these questions to your lender when securing a personal loan.
A personal loan interest rate varies depending on the bank or lender as well as your financial situation. A secured personal loan’s interest rate ranges from 4.53% to as high as 19.49%. Unsecured personal loans can start at 6.28% to a high of 22.99%. The better your credit history is, the lower interest rates you’ll enjoy. Multiple personal loans from the same bank may require a different interest rate.
Qualifications for a lower interest rate
Interest rates depend on your credit rating. This explains why bad credit personal loans apply higher interest rates compared to regular personal loans. If you have a very low credit rating, your bank, or lender might decline your application. To prevent this, you might want to check your credit file to avoid any surprises. Having a better understanding of your credit score and credit standing helps in making better personal finance decisions. You can get a free copy of your credit report from Check Your Credit.
Common fees that comes together with personal loans
Most personal loans require an application fee and an ongoing fee. Some may even charge you with an early repayment fee. To give you an idea, most application fees ranges anywhere from $158 to $370 for secured personal loans and $150 to $580 for unsecured personal loans for a $20,000 loan with a loan repayment term of 3 years.
An account-keeping fee or administration fee may also be included by your lender. Fees that may also be included are late repayment fees and early discharge fees. You can get a list of the additional fees you may need to cover for your loan from your lender.
Are interest rates fixed or variable?
A fixed interest rates comes with a singular interest rate throughout the term of your loan. Meanwhile, a variable interest rate varies, depending on the market and may be higher or lower that the initial interest rate you paid for.
Choosing between the two is a personal choice. A fixed rate however gives you certainty on how much to pay for during the repayment term of your loan. If interest rates go up, you won’t be affected with an increase in payment. The same is true when interest rates go down. You won’t be able to avail savings as well. A variable interest rate is unpredictable. You will either save or pay more on top of your principal loan, depending in the current rates in the market.
Are extra payments and lump sum payments possible?
Most lenders welcome the idea of making extra payments. However, some may require you to pay an early termination fee, so it would be ideal to coordinate with your bank or lender to determine which offers the best possible savings for you. Fees for paying your loan ahead of your original loan term ranges from $0 up to a high $800. An average of $160 would be a reasonable amount as your early loan termination fee. Be sure to read the product disclosure statements to be able to identify the fees and charges included in your loan.
Still, have questions? Talk to an Intellichoice personal loan specialist to learn more. Let us help you compare personal loans to get the best options available for your finances.