What can I use a personal loan for?

Rates and fees last updated on

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.

What will lenders let me take out a personal loan for?

PurposeCan you fund with a personal loan?Are there other financing options?
Vehicle purchaseYesIf the vehicle is eligible, opt for a car loan for lower rates. Unsecured personal loans are also an option.
Debt consolidationYesYou can opt for a debt consolidation personal loan or a balance transfer credit card.
Home renovationsYesAs well as an unsecured personal loan, you can also consider a line of credit home loan or construction home loan.
Taking a holidayYesYou can opt for an unsecured personal loan for this purpose.
Business useYesNoSome lenders such as Harmoney let you use personal loans for business purposes, but generally, you will be required to take out a business loan.

What other credit 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 loans. 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.
  • Business loans. If you require a loan for business purposes you can compare lenders offering loans from $5,000 to $250,000.
  • 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.

Will my loan purpose affect my application?

Yes, it can. For example, if you are applying for debt consolidation you may already appear to be a higher risk than someone who is buying an asset, such as a car, or someone who is investing in their property by undertaking renovations. However, it depends on how the lender assesses your application's risk. Ultimately, your eligibility will come down to whether you meet the lender's application criteria and whether you can afford the loan.

When should I not use a personal loan?

While many loan purposes are acceptable, some are not always advised. Here are some situations where you may want to reconsider your loan application:

  • 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 July 25th, 2017
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment Product Description
Citi Personal Loan Plus
From 11.99% (variable)
3 to 5 years
$0 ($199 fee waived)
Borrow up to $75,000. All approved applicants will receive the advertised variable rate of 11.99% p.a.
RateSetter Personal Loan
From 8.46% (fixed)
0.5 to 5 years
$0 (Upfront fee $250 for loan terms of 2 years and above)
Ratesetter allow you to get a personalised rate based on your credit score.
NOW FINANCE Personal Loans
From 8.95% (fixed)
1.5 to 7 years
$395 (Based on $10,000)
Get rewarded with a low interest rate for your good credit history.
SocietyOne Unsecured Personal Loan
From 7.9% (fixed)
2 to 5 years
3% (of loan amount)
Interest rates for a 3 year loan range from 7.9% p.a. to 10.90% p.a. Comparison rate from 9.92% p.a. to 13.63% p.a. for good credit scores A and AA
Pepper Money Unsecured Fixed Rate Personal Loan
From 9.99% (fixed)
1 to 7 years
Apply for up to $50,000 and receive conditional approval within minutes.
Latitude Personal Loans (Unsecured)
From 13.99% (fixed)
2 to 7 years
$250 (Loans under $4000 - $140)
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.
bcu Unsecured Multipurpose Loan
From 8.94% (variable)
1 to 5 years
A flexible unsecured or secured personal loan with a competitive rate.
QT Mutual Bank Personal Loan
From 12.95% (variable)
5 years
$395 (establishment fee)
You can use this personal loan to buy just about anything: a new boat, home renovations, a holiday or even to consolidate existing debt. Only available to Queenslanders
Harmoney Unsecured Personal Loan
From 8.99% (fixed)
3 to 5 years
$500 (Upfront fee)
Borrow up to $35,000 with the unsecured peer to peer loan from Harmoney
St.George Get Set Loan Personal Loan
From 17% (variable)
A revolving line of credit that lets you access your funds as and when you need to.

Compare up to 4 providers

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Related Posts

RateSetter Personal Loan

Ratesetter allow you to get a personalised rate based on your credit score.

Citi Personal Loan Plus

Borrow up to $75,000. All approved applicants will receive the advertised variable rate of 11.99% p.a.

NOW FINANCE Personal Loans

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

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2 Responses

  1. Default Gravatar
    NicApril 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
      ElizabethApril 21, 2016Staff

      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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