Personal loans
You take out personal loans for any number of reasons. Some of the most common include:
- buying a car,
- going on a holiday,
- doing a renovation, and
- to consolidate multiple debts into a single loan to make your repayments easier to manage.
Personal loan terms usually range from one to seven years.
Interest rates
Interest rates in Australia are currently at record lows. It’s important to understand that even a small difference in the interest rate on two different personal loan products can make a BIG difference to your repayments and how much you’ll repay over the life of your loan.
Personal loan interest rates can be fixed or variable. Fixed interest rates don’t change if market interest rates change. They give you repayment certainty. If interest rates go up, your repayments will stay the same.
However, if interest rates go down, your repayments won’t go down either. Fixed interest rates may also have early exit fees if you pay out your loan early.
Variable interest rates on the other hand can go up or down based on movements in market interest rates. If they go up, so do your repayments. But if they go down, your repayments do as well.
However, if rates do go down and you can keep your repayments at the same level, you’ll pay your personal loan off faster. Variable interest rate loans don’t usually have any early repayment fees.
What is a comparison rate?
Lenders in Australia typically advertise two interest rates on their products: a comparison rate and a nominal rate. The comparison rate is higher, but it includes the cost of all loan fees and charges. It therefore reflects the true cost of the loan.
The lower nominal interest rate on the other hand is just the interest charge. You should ALWAYS use the comparison rate when evaluating different loan products. Lenders in Australia are legally obliged to provide you with the comparison interest rate BEFORE you take out any loan.
Secured versus unsecured loans
Personal loans can either be secured or unsecured. A secured loan has the title of an asset provided to your lender as collateral security (for example, a car). If you fail to make your repayments, the lender can repossess the asset and sell it to repay the debt.
An unsecured loan on the other hand doesn’t have any collateral security. The interest rate on an unsecured loan will be higher than one on a secured loan, and you may be asked to provide a guarantor. A guarantor is a person who agrees to become legally liable for your loan repayments if you stop making them.
How we can help
Taking out a personal loan can be confusing. The market is highly competitive and there is a vast range of products on offer. At Wisebuy Investment Group in Newcastle, our experienced and licensed brokers can help you to find the right personal loan. We can also help you with your application.
Contact us today for an obligation-free chat! We’ll take the time to understand your individual needs before providing you with appropriate advice. Our focus will be on finding the right personal loan for your needs from over 60 Australian lenders.
And best of all, our service is free!
