Help me choose a personal loan

A guide to finding the right personal loan for you.

Once you've decided that you need a personal loan you might find yourself overwhelmed with the amount of choice you have. Low-interest loans, unsecured, car loans, low doc; sorting through these options and finding the right loan for you is an important step to getting your finance. Applying for the wrong type of loan could see you paying unnecessary interest or fees or getting a loan that doesn't suit your lifestyle. To save yourself from being stuck with the wrong type of loan for the next 1-7 years, read this guide for tips on finding the right one.

How do personal loans work?

A personal loan can be used to finance personal purchases, consolidate debt or for investment purposes. The funds can be paid to you in a lump sum or as a line of credit, with the former being repaid over a term of 1-7 years. Personal loans can be secured or unsecured, depending on your loan purpose or the assets you have to offer as security, and are usually available for loan amounts of between $1,000 and $80,000.

A quick guide to personal loan types

Loan type Typical loan term (years) Typical loan amount Interest rate Suitable for Compare
Unsecured personal loan 1-7 $1,000-$50,000 Fixed or variable rate, 8-16% p.a.
  • Debt consolidation
  • Used car purchase
  • Travel
  • Renovation
Secured personal loan 1-7 $1,000-$100,000 Fixed or variable rate, 7-14% p.a.
  • Vehicle purchase
  • Debt consolidation
  • Renovation
Car loan 1-7 $2,000-$100,000 Fixed or variable rate, 4-14% p.a.
  • New or used vehicle purchase
Low doc loan 1-7 $1,000-$50,000 Fixed or variable rate, 10-30% p.a.
  • Debt consolidation
  • Vehicle purchase
  • Travel
  • Renovation
Peer-to-peer 1-5 $2,000-$35,000 Fixed rate based on your credit score, 4-15% p.a.
  • Debt consolidation
  • Vehicle purchase
  • Travel
  • Renovation
Line of credit Ongoing $5,000-$50,000 Variable rate, 7-14% p.a.
  • Debt consolidation
  • Travel
  • Renovation
Overdraft Ongoing $100-$50,000 Variable rate, 11-15% p.a.
  • Unexpected expenses
  • Travel
  • Renovation

How to compare your options and choose a personal loan

  • Check the repayment flexibility. Most lenders offer you the choice of weekly, fortnightly or monthly repayments to work with your pay schedule, but not all do. You should also find out if you are able to make extra repayments without penalty or restrictions and whether you can pay back the loan before the end of the term.
  • Make sure you can use the funds for the purpose you need. Some loans, especially secured loans, come with restrictions on how you can use the loan amount. For example, if you get a car loan, you will only be able to spend the loan funds on a vehicle purchase and the vehicle needs to be eligible. Similarly, some lenders will not let you use a personal loan for business purposes. Make sure you can use your loan how you need to.
  • Find out how easy the loan will be to manage. You'll find that online account management is on offer from most lenders, but not all. You may also be required to pay the loan rather than using a direct debit, which is a standard for many lenders. You should also check how easy the lender is to contact and find out how you can contact them – phone, email, live chat or social media.
  • Determine if the repayments will be manageable on your budget. Use the personal loan repayment calculator to see what repayments you will need to make and then make sure that these repayments will be manageable on your budget.

Questions you need to ask to find the right loan

Before you settle on a personal loan, there are several questions that you should ask to make sure it's right for you.

Picture: Shutterstock

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Personal Loan Offers

Important Information*
Harmoney Unsecured Personal Loan

You'll receive a fixed rate between 6.99% p.a. and 28.69% p.a. based on your risk profile.
Apply for a loan up to $70,000 and repay your loan over 3 or 5 years terms.

Citi Personal Loan Plus

You'll receive a variable rate between 8.99% p.a. and 17.99% p.a. (9.96% p.a. to 18.91% p.a. comparison rate) based on your risk profile
A credit limit up to $75,000 that you can continue to draw down over terms up to 5 years.

ANZ Fixed Rate Personal Loan

You'll receive a fixed rate of 12.45% p.a.
Apply for up to $50,000 to use for a variety of purposes without needing to add security. Available to self-employed applicants.

RateSetter Unsecured Personal Loan - 3yr Fixed

You'll receive a fixed rate from 8.11% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 6 months. Interest and comparison rates calculated for a loan term of 3 years.

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