Personal loans

Personal loan

For the plans in between.

Who this is for

The renovation, the wedding, the trip, further study, medical and dental care, a proper goodbye, or rolling several debts into one. Personal loans cover the plans that do not fit a mortgage.

They sit in a specific gap: larger than sensibly goes on a credit card, smaller than is worth restructuring a mortgage for, and needed now rather than after a year of saving. If your need is well under a few thousand dollars, or you could save for it within a few months, a personal loan is usually the wrong tool.

Why a fixed term beats revolving credit

An unsecured personal loan gives you a fixed amount over a fixed term with a clear end date, no security required. In many cases it is significantly cheaper than leaving the same balance on a credit card.

The difference is structural rather than just a matter of rate. A personal loan amortises: every repayment reduces the balance, and there is a date on which the debt is gone. A credit card revolves, and the minimum repayment is calculated as a small percentage of the balance, which falls as the balance falls. That is why paying the minimum on a card can take decades on a balance a personal loan would clear in four years. The example below puts numbers on it.

We compare lenders on rate, fees, and flexibility, and match the loan to what you are actually funding.

Rates on personal loans are usually risk-based, meaning the rate you are offered depends on your credit profile rather than being one advertised number. The rate in the advertisement is generally the best available to the strongest applicants, which is worth knowing before you compare offers.

How the process runs

Personal loans are among the quickest to arrange. Approval within a few days is common where the paperwork is complete, though the timeframe is the lender's rather than ours.

What it is for, and how much. The purpose shapes which lenders apply and sometimes the rate. It also shapes the right term, which should match the life of what you are funding.
Compare on comparison rate. We look across the panel at rate, establishment and monthly fees, and early repayment terms, expressed so they can actually be compared.
One application. We check your position against lender criteria before lodging, so we are not testing the market with your credit file.
The lender decides. Rate and approval are the lender's decision, made against your credit profile. Because pricing is risk-based, the rate offered may differ from the advertised one.
Funds and first repayment. Money is usually available within a few days of documents being signed, and repayments start on the schedule set in the contract.

What to watch

Rates depend on your credit profile, and a longer term costs more in total even when the repayment looks comfortable. We keep the term as short as your budget allows.

Match the term to what you are buying. Financing a two-week holiday over seven years means paying for it long after the memory has faded, and financing a kitchen over seven years is entirely reasonable. The question is whether the thing lasts as long as the debt.

If you are consolidating, the loan only helps if the cards are closed or the limits reduced afterwards. Clearing cards with a personal loan and then rebuilding the balances leaves you with both debts, which is a worse position than you started in. We would rather raise that before settlement than after.

Four years, or thirty-seven

The same $20,000 balance, handled two ways. This is the clearest argument for a fixed term with an end date, and it is why we ask what is sitting on your cards before recommending anything. The figures below are a worked illustration, not an offer, a quote, or a prediction of your result.

Amount owing: $20,000
Personal loan rate: 11.95% p.a.
Personal loan repayment: $526 / month
Paid off in: 4 years
Total interest paid: $5,257
Credit card rate: 20.99% p.a.
Paying only the minimum, cleared in: 36 years 11 months
Total interest paid: $44,678

Illustration only. The personal loan assumes monthly repayments at one fixed rate over four years with no fees. The credit card assumes a minimum repayment of 2.5% of the balance or $30, whichever is greater, interest compounding monthly, and no further spending on the card. Real cards and loans carry fees not included here. Both rates are examples used to demonstrate the comparison, not rates available to you or offered by any lender.

What it costs

Interest, risk-based and generally well above a mortgage rate and well below a credit card rate. The rate offered to you depends on your credit profile.
Establishment fee, commonly a few hundred dollars, sometimes waived on promotion.
Monthly service fee, often around ten dollars. Small monthly, and it is what separates the headline rate from the comparison rate over a five-year term.
Early repayment fees, which are more common on fixed-rate personal loans than variable ones. Worth checking if you expect to repay ahead of schedule.
Missed payment fees, plus the effect on your credit file, which follows you into your next application.
Optional insurance offered alongside the loan. Consider whether you need it separately from whether you want the loan, and never assume it is required.

Do I qualify

Regular income that covers the repayment alongside your existing commitments. Most lenders want you past probation and in stable work.
Credit history. This matters more than on a secured loan, because there is no asset behind it. Your score largely determines both approval and the rate you are offered.
Existing commitments. Card limits are counted at the limit rather than the balance, so unused credit reduces what you can borrow. Closing a card you do not use can help.
Living expenses. Lenders assess your actual spending from your transaction accounts, not an estimate. Regular buy-now-pay-later use and gambling transactions both show up and both count against you.
Residency and age. Australian citizenship or permanent residency for most lenders, and at least eighteen years old.

Everything on this page is general information about how unsecured personal loans work in Australia. It does not take your objectives, financial situation or needs into account, and it is not a recommendation that you borrow.

Nothing here is an offer of credit. No rate, cost, timeframe or outcome described above is guaranteed. Any recommendation we make follows a full assessment of your circumstances, and approval, pricing and conditions are decided by the lender against its own criteria. Where a decision touches on tax, superannuation or estate matters, we work alongside your accountant, financial adviser or solicitor rather than in place of them.

Personal loan pricing is risk-based, so the rate you are offered depends on your credit profile and may differ from any rate advertised. Missing repayments affects your credit file and may incur fees.

Common questions

Is a personal loan cheaper than a credit card?

Usually, on both rate and structure. Personal loan rates generally sit well below credit card rates, and the fixed term is what does most of the work: every repayment reduces the balance and there is a date the debt ends. A card minimum repayment shrinks as the balance shrinks, which is why the same amount can take decades to clear. The example above shows the difference on $20,000.

What rate will I actually get?

Personal loan pricing is usually risk-based, so the rate depends on your credit profile rather than being a single advertised number. The rate in the advertisement is generally the best rate offered to the strongest applicants. We look at your position first and approach lenders whose criteria fit, which gives a more realistic picture than comparing headline rates.

Will applying affect my credit score?

Each application creates an enquiry on your credit file, and several enquiries in a short period look worse than one. Some lenders can give an indicative rate without a full enquiry, which is worth using where it is available. We check your circumstances against lender criteria before lodging so we are not testing the market with your file.

Should I consolidate my debts into a personal loan?

It can work well, particularly where you are replacing several high-rate card balances with one lower-rate loan that has an end date. Two conditions decide whether it actually helps. The cards need to be closed or their limits reduced, otherwise the balances rebuild and you carry both debts. And the term should be no longer than necessary, because stretching the same debt over more years lowers the monthly cost and raises the total.

Can I pay it off early?

Usually yes, and on a variable-rate personal loan there is often little or no penalty for doing so. Fixed-rate loans are more likely to charge an early termination fee. Since paying early is a common outcome for personal loans, particularly where the plan is to clear it with a bonus or a tax refund, it is worth checking the exit terms before you sign rather than after.

How much can I borrow?

Unsecured personal loans commonly run from a few thousand dollars up to around fifty thousand, with the upper end depending on the lender and on your income and commitments. Because there is no security, capacity is assessed on your income and expenses alone. If you need more than that range and own property, borrowing against the home is generally cheaper, though it turns unsecured debt into debt secured against where you live.

Talk this through with a broker

Send your details and we'll come back to you with what these numbers mean for your borrowing, usually within one business day.