Despite their confidence, Australians are seriously misinformed about personal loans

Elizabeth Barry 22 June 2017

confused about loans

A new survey from ME reveals a large gap in Australia's financial literacy.

A survey released this week by ME has shown that Australians are confident in their financial knowledge but lack an understanding of basic credit products.

The study surveyed 1,500 Australians and found that only 13% rated their banking knowledge as "below average" but 60% failed a basic banking literacy quiz. Australians appeared to be confused about various aspects of personal loan products, including the features important to saving them money.

The majority of those surveyed (58%) could not correctly identify the benefits of a personal loan over a credit card. When asked about borrowing $20,000 to buy a used car, almost three-quarters (74%) incorrectly identified or did not know that a personal loan would be cheaper than adding that amount to their home loan.

Head of deposits and transaction banking at ME Nick Emery said that the results indicate that people are under-informed.

“Some Aussies fail to educate themselves because they find it dull and complex and think that they know best, while others find working with numbers difficult and put their head in the sand. But like it or not, banking is part of our daily lives and understanding the basics is a life skill."

The survey results support Emery's statement, with less than half of all survey respondents in every demographic taking any steps to learn about banking products and finance.

Surprisingly, the demographic with the largest quantity of those that admitted they hadn't done anything to learn more about banking products and financing were Aussies aged 35-49 (40%), followed by those in the 55-74 age bracket (35%) and the 18-34 year olds (32%).

So, if you're looking to get more informed, where does Emery suggest you begin?

“A few good rules of thumb to start with are to review your banking products annually, like you might with an electricity or insurance contract, and be prepared to switch providers if you’re not getting a good deal. It’s easy once you know how."

“Banking choices are best made on facts. A hunch or a guess could lose you thousands.”

Get informed and start comparing personal loans on finder today.

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