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5 features to look for in a personal loan beyond the rate


Interest rates are just a piece of the puzzle when choosing a personal loan. Here are 5 other features to look for to save money and frustration.

Sponsored by People's Choice - flexible personal loans and car loans. Whether you want to buy a new car, renovate your home, refinance an existing loan or go on a dream holiday, People's Choice can help you get a personal loan that's right for you.

When comparing personal loans it's important to weigh up the interest rate, as choosing between a variable or fixed rate or securing your loan can leave you with more cash in your pocket by the time you've paid the loan off.

While interest rates are a good signal for how much you can expect to ultimately pay, they definitely aren't the only thing you should look at. With that in mind, here are 5 features to look for in a personal loan beyond just the rate.

Calculate your fees

Fees for personal loans come in all shapes and sizes. Some are one-time, others are ongoing, but all of them can add up. The most common ones to look out for are:

Establishment fees. Also known as application fees, these fees cover the cost of processing your application. They're usually charged once you've been approved for the loan. You can expect to pay anywhere from $150 to $600, but you may be able to have this fee waived through negotiation or special deals.

Account fees. These may be called monthly or annual fees. Simply put they are ongoing costs that you will pay every month or year. While they could seem to be a fraction of the total cost, they can add up. A monthly fee of $10 over a loan term of 5 years would come with a $600 price tag.

Early payment/break fees. Making extra repayments or paying off your loan early can save you money by reducing your interest owed. Some lenders have fees attached to early payments, so make sure the benefits outweigh the cost.

You may run across fees not on this list, so ensure you understand your loan before signing. At a glance, the comparison rate is a good indication of the true cost of a loan. It takes into account both interest and fees for a standard loan, although your cost will differ depending on how different it is to the selected, standard loan. For best results, use a personal loan calculator.

Consider your loan term and flexible payment options

Your loan term will have a noticeable impact on how much you pay monthly and how much you will pay overall. Do you want a shorter term? This means higher monthly repayments but you're paying it off faster. Would you prefer a longer term? This provides more affordable monthly repayments at the cost of paying more interest overall.

The faster you repay a particular loan, the less you'll have to pay overall in interest. For this reason, you may want to look for a lender who allows early repayments so you can throw some extra money at your debt whenever you can afford to.

Chase special promotions and deals

Lenders sometimes promote a loan by offering discounts, waived fees or a cashback bonus on signing. Keep your eyes out for these deals, as they often only last for a limited time.

Some lenders also offer bundle deals and will waive fees or offer discounted rates if you are a member of their organisation or use their other products and services.

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Compare non-bank options

These days, you are restricting yourself if you only look at what the big banks are offering. Peer-to-peer lenders, neobanks and credit unions can provide competitive alternatives to bank loans.

Peer-to-peer lenders facilitate a platform where investors finance a portfolio of personal loans and earn interest on what they lend, while borrowers are given an individual rate based on their credit score.

Neobanks are digital-first or digital-only banking platforms or apps that promise lower fees, easy access and a seamless experience. They typically promote having lower fees than traditional banks.

Credit unions offer the same services as banks but have a smaller, though still significant, market share. For example People's Choice has almost 400,000 members and manages close to $10 billion in assets. Credit unions also differ from banks in that they are owned by members. This means profits are reinvested into the business, its products, and ultimately its members.

Contemplate their customer service

A personal loan is a big decision and one that you're signed onto for years to come. You can save yourself many headaches by looking up customer service reviews. Check if their customer service is online or at a call centre versus having bricks-and-mortar branches. It's important to trust your lender so you're confident you're getting the best deal and you're getting good advice.

People's Choice Discounted Personal Loan (Car Loan) offers a low rate of 4.65% p.a. (4.99% p.a. comparison) with fast pre-approval, flexible loan terms and is available when loans are secured against a new or used car or caravan up to five years of age with a loan value greater than $20,000. T&Cs apply.

Compare other car loan options here

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