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What can I use a personal loan for?

Rates and Fees verified correct on March 27th, 2017

Here is what you should (and shouldn't) use a personal loan for.

There is a range of credit options available to you should you need them, and personal loans are just one of many. So, in which situations should you consider a personal loan and when should you avoid one? Find out in this guide.

When should I consider a personal loan?

There are a few situations where a personal loan might be the financing option to consider:

  • Buying a car. This is one of the most common uses for a personal loan. If you don't have the money available but you need to buy a car, a secured car loan can help you make your purchase at a competitive price. Low interest rates are available if you attach the car as security.
  • Consolidating debt. Multiple debts across personal loans and credit cards can be consolidated into a debt consolidation personal loan. This will help you pay off your debt within an established timeframe and reduce what you're paying in interest and fees.
  • Making a large purchase. If you need to buy new furniture or electronics or even undertake home renovations and you don't have the money you need, a personal loan can provide you with a lump sum or line of credit to help you.
  • Funding a wedding. Weddings are expensive, with most costing between $5,000 and $50,000. If you can't save that money before the big day a personal loan may be an option to consider. Secured loan options are also available if you have an asset to use as security, and can bring down the interest rate considerably.
  • Going on a holiday. Want to have a break but don't have the money? If you have a stable income and the means to repay the holiday, a personal loan can help you get the money you need more quickly.

What other options do I have to consider?

While a personal loan is a viable option for the above scenarios, you also have other financing options to consider. These include:

  • Home equity. If you're undertaking home renovations, using the equity from your home can also be an option. Work out the costs of this as well as a personal loan to see which one would be a better option.
  • Credit cards. These can be a good source of ongoing credit and can come with high limits – between $1,000 and $100,000 – that you can use when you don't have the ready money.
  • Balance transfer credit card. If you have debt across a few credit cards or even a personal loan, you can consider a balance transfer credit card. These let you pay 0% interest on the debt for an extended period of time.

When should I not use a personal loan?

There are certain situations in which a personal loan may not be the best idea. These can include:

  • If you can't afford the repayments. Use a loan repayment calculator to determine how much your repayments will be before you take out a personal loan. Work out a budget and see if you can afford these repayments. If you can't, don't apply.
  • If you can easily save the money. Want to take a holiday or buy a new lounge, but it isn't urgent? A personal loan may not be the best option. Work out how much your repayments would be and save that amount each month instead. If you can't wait that long to do what you're planning, save instead.
  • If it's a bad investment. Are you thinking of taking out a loan to undertake home renovations or some other investment? Make sure the investment will add value rather than take it away, otherwise you'll be repaying your loan on an idea that lost money.
  • If your income and employment aren't stable. You should not take out a personal loan unless you are in a stable financial position. If there is any reason why you think your income or employment situation might change for the worse, don't apply for a loan.

Compare a range of personal loans

Rates last updated March 27th, 2017
Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment
HSBC Personal Loan
A competitive fixed interest rate loan with the option to make extra repayments. Min. income $30,000
From 9.5% (fixed) 10.06% $5,000 1 to 5 years $150 Go to site More
Latitude Personal Loans (Unsecured)
An unsecured loan designed for multiple purposes – renovating, buying a car or travelling. Funds can be in your count in as little as 24 hours.
From 13.99% (fixed) 15.2% $3,000 2 to 7 years $250 (Loans under $4000 - $140) Go to site More
NOW FINANCE Personal Loans
Get rewarded with a low interest rate for your good credit history.
From 9.95% (fixed) 11.41% $4,000 1.5 to 7 years $395 (Based on $10,000) Go to site More
Citi Personal Loan Plus
Borrow up to $75,000 with this personal loan offer from Citi.
From 11.99% (variable) 12.77% $5,000 3 to 5 years $199 (monthly fees waived in the first year) Go to site More
ANZ Fixed Rate Personal Loan
A flexible loan option that lets you pay off your debt, buy a car, fix up your house or cover travel costs.
From 13.95% (fixed) 14.81% $5,000 1 to 7 years $150 Go to site More
MoneyPlace P2P Loan
Interest rates from 8.90% p.a to 17.25% p.a. Comp rates from 8.90% p.a to 19.01% p.a depending on your credit score.
From 8.9% (fixed) 8.9% $5,000 3 to 5 years 0% - 3.75% of loan amount Go to site More
SocietyOne Unsecured Personal Loan
Interest rates for a 3 year loan range from 7.88% p.a. to 25.49% p.a. Comparison rate from 9.9% p.a. to 26.74% p.a. depending on your credit score
From 7.88% (fixed) 9.9% $5,000 2 to 5 years 3% (of loan amount) Go to site More
St.George Get Set Loan Personal Loan
A revolving line of credit that lets you access your funds as and when you need to.
From 17% (variable) $5,000 $150 Go to site More
ANZ Variable Rate Personal Loan
A variable rate loan that lets you make and redraw additional repayments.
From 14.69% (variable) 15.55% $5,000 1 to 7 years $150 Go to site More
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Related Posts

HSBC Personal Loan

A competitive fixed interest rate loan with the option to make extra repayments. Min. income $30,000

ANZ Variable Rate Personal Loan

A variable rate loan that lets you make and redraw additional repayments.

Latitude Personal Loan (Secured)

Can be used for whatever purpose: renovating, buying a car, booking a holiday. Funds can be in your account in as little as 24 hours.

NOW FINANCE Personal Loans

Get rewarded with a low interest rate for your good credit history.

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2 Responses to What can I use a personal loan for?

  1. Default Gravatar
    Nic | April 20, 2016

    Why can’t I use a personal loan to fund software I’m developing independently, not as a business? Do banks find someone who takes out a personal loan to repay debt or travel or whatever less of a risk than someone without debt with a steady income working on a personal project?

    • Staff
      Elizabeth | April 21, 2016

      Hi Nic,

      If you opt for an unsecured personal loan the way you use your loan amount is up to you. However, lenders will require you to list your loan purpose in the application and this may form part of their decision.

      Hope this helps,


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