Live the life you want without breaking the bank
Taking out a personal loan can put you in the fast lane to achieving your financial and lifestyle goals.
Whether you want to purchase a new car, fund a holiday, pay for a wedding, renovate your home, consolidate your debts or cover a financial emergency, a personal loan can provide the funds you need to take the next step in your life.
What are the different types of personal loans?
The first step is finding the right personal loan for you. That means understanding which different types are available.
· Unsecured personal loans don’t require you to provide an asset as security for the loan. These can be an excellent option if you’re just starting out and don’t yet own a home or car, but they often attract a higher interest rate.
· Secured personal loans do require you to put up an asset to secure the loan. These can be a good choice if you own your home, for example, and often offer a lower interest rate than unsecured personal loans.
· Car loans may be offered to you by your car dealer – known as dealer finance – but you can often find a better car loan deal from an independent lender. Just ensure that you’re aware of any lump sum payments that may be required at the end of the loan term.
· Overdraft loans are usually a short-term solution for covering small unexpected expenses such as emergency home repairs. In addition to interest repayments, take note of any establishment and ongoing service fees charged by the lender.
· Debt consolidation loans may be an easy way to pay off your existing debt at a reduced interest rate. For example, you may be paying off existing debt to your credit card provider at an 18% interest rate. A debt consolidation loan allows you to clear that debt and pay a lower interest rate.
How can you find a personal loan that suits your goals?
If you have your sights set on something that comes with a price tag, supplementing your savings with a personal loan might help you reach that goal faster. Let's say you're saving for a wedding. The average Australian wedding costs more than $36,000, with 60% of people using a loan to help fund their big day.
You calculate that the total cost of your wedding will be $29,000. Between your savings and the contributions from your parents, you’ve pooled together $25,000. A personal loan might help cover the remaining $4,000.
What should you consider before applying for a personal loan?
The larger the personal loan, the higher your monthly repayments will be. Ensure that you can afford to make the repayments, and factor into your budget any establishment and ongoing service fees. You’ll also need to consider the term of the loan – usually one to five years – and whether you expect your financial situation to change during that period.
How do you apply for a personal loan?
In most cases, you’ll need to provide pay slips, bank account statements and copies of bills to prove to your lender that you can afford to make the repayments. If you’re applying for a secured loan, you may also need to provide proof of ownership of your asset.
Put yourself on the fast track to achieving your financial and lifestyle goals by shopping around for the right loan.
Compare personal loans to help you find the right personal loan for you.