A personal loan can give you access to extra money to pay for something bigger than your everyday purchases, it could be for a car, a wedding, a holiday, or even some home renovations.

No matter what you plan to take a personal loan out for, what you'll want to look for in a personal loan is the same. You'll want a loan that you can afford to pay back, with a competitive interest rate and over a time frame that allows you to make the payments without falling behind.

Personal Loan Finder® can help you find the right personal loan for you.

• Disclaimer and warning about borrowing

  1. No loans offered with repayment in full due in 60 days or less
  2. Interest rates range between 3.35% p.a. and 22.99% p.a.
  3. A representative example is expressed in the table above with all fees and charges payable in the Monthly Repayment column with the representative APR expressed in the comparison rate column.

  *The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.

What is a personal loan?

In a nutshell, a personal loan is a lump-sum payment or line of credit between $2,000 and $100,000 that you repay over a period of up to seven years.

Personal loans are used for a variety of things but generally people tend to take them out for those one off more expensive purchases like a car, paying for a wedding or doing renovations. However a personal loan can be useful if you need to consolidate existing debt you have elsewhere which can help you save on fees and multiple interest rates.

Like most loans, when you repay a personal loan you are charged interest on top of the loan, which is a percentage of the original amount (often called 'the principal' in bank speak) that you asked to borrow in the first place. The interest rate is set by the bank or institution that is doing the actual lending of the money to you.

Interest rates come in two forms, the standard interest rate (often called the advertised rate) and then there is what's called the comparison rate.

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How personal loans work

Jump ahead to one of the steps in the personal loan process to find out more about it.

Step 1: Comparison

Finding the right personal loan is the first step of the process. There are a few parts to this, the first being choosing the type of personal loan that you want.

Here are some of the most typical personal loans and how they differ:

• Secured loans work by you offering an asset as security such as a car in exchange for less fees and a lower interest rate. As a result secured loans are often used by people who are looking to buy a car, but other assets such as property can be used too. Basically a secured loan can be secured either by what you are planning on buying (like a car) or by something that you already own.
• Car loans are available through a bank, lender or even using car dealer finance if you are buying your car through a dealer.
• Unsecured loans don't involve having to put up an asset as security when you take out the loan - or they are used when you want to borrow money to pay for something that can't really be used to obtain to a secured personal loan, (such as a wedding or a holiday.)
• Line of credit. You'll get access to a set credit limit, but only pay interest on the funds you've used. You can consolidate debts or even fund a range of purchases with this type of loan.
• Debt consolidation loan gathering up your debt and taking out a debt consolidation loan can be a good tactic if you are serious about getting debt free. A debt consolidation loan rolls your debt into a single loan with a potentially lower rate and fewer fees.
• Overdrafts. An overdraft is a lot like an unsecured loan but it is usually attached to your everyday bank account. You're given a set amount that you can withdraw from your account which is over what you actually have in your account (once your own funds have been exhausted.)
• Bad credit loans. If you have bad credit but are in need of a loan, there are still options available to you. Either apply with a lender who doesn't perform a credit check, or who accepts applicants with negative listings on their file. However, if you are struggling with your finances and your credit history there are other options to consider, before taking out a loan. If you're struggling financially and would like to speak to someone for free financial advice, information and assistance you can call the Financial Counsellors hotline on 1800 007 007 (open from 9:30am to 4pm, Monday to Friday).

• How do I know which type of personal loan I need?

  What if I want to buy a car?

  You can consider either a car loan or an unsecured personal loan. A car loan is preferable if the car you're looking to purchase is eligible to be used as security (not all used cars are) as the interest rates are lower. However, if you're buying a used car that is older, don't want to use the car as security for the loan or want to borrow extra funds for something else as well, you may want to consider an unsecured loan. You can compare both on the page above.

  What kind of personal loan can I apply for if I want to pay for a wedding, a holiday or home renovations?

  An unsecured loan is likely to be the best option. These can come as either a lump sum payment or a line of credit that you can draw on when you need to.

  What about if I need to borrow less than $3,000?

  You won't have many options from banks for loans of this amount, so you may need to consider a personal overdraft, a line of credit or a credit card. You can also consider a short term loan (there is a comparison on the page above) these are very high-cost forms of credit and should only be taken out if you absolutely have no alternatives.

  What if I have an asset, such as a vehicle, to offer as security and need a personal loan, does that help?

  A secured personal loan can be a good option. This involves you attaching an asset you already own as security for the loan which means you'll be offered a better deal in terms of the interest rate. You can also use the loan for any purpose.

  I need a loan to consolidate my debt - what should I look for?

  Debt consolidation loans work by letting you bring debts from different credit accounts together so you can pay them off with one rate and one set of fees.
  When you're comparing loans for debt consolidation:

  • Consider whether the new loan will save you money. Work out your new monthly repayment and if this will be lower than what you are currently paying.
  • Think about your eligibility for the loan. If you have a lot of debt from several accounts you may not be able to consolidate all of it, or if you have bad credit you may need to consider your debt consolidation options.

After you've decided which type of personal loan you want to apply for, here's how to compare the personal loan offers from different banks and lenders:

• Loan amount. What is the minimum and maximum amount the lender will let you apply for and is it enough?
• Loan term. What is the minimum and maximum loan term? Usually, terms of between one and seven years are available, but terms differ between providers.
• Fees. Check for upfront fees such as establishment or application fees, and ongoing fees such as monthly or annual fees. These will need to be incorporated into your loan amount.
• Interest rate. Is the rate fixed or variable? Is the rate competitive?
• Affordability. Once you know your loan amount and term, you can use a loan repayment calculator to see if your regular repayments will be affordable on your budget.
• Repayments. Can you choose between weekly, fortnightly or monthly repayments? Is it possible to make extra repayments without penalty? Can you repay the loan early without penalty?

Step 2: Eligibility

Lenders have set eligibility criteria for their personal loans. These can include any of the following:

• Age. You will need to be at least 18 years old to apply for a loan for Australia. Some lenders may require you to be over 21.
• Income. You may need to earn over a certain amount to be eligible to apply for a loan. Some lenders may require you that earn as much as $35,000. Other lenders may require lower earnings, such as $24,000. If you're unsure whether your income is high enough, there are loans specifically designed for people on lower incomes.
• Employment. Most lenders will require you to be employed, but some will consider unemployed applicants. Some lenders will also require you to be out of your probation period or to be employed full-time. You can find lenders that consider casual employees here. Some lenders may also consider applicants receiving Centrelink payments.
• Residency. You may have to be an Australian citizen or permanent resident to be eligible for a personal loan, although some lenders consider temporary residents.

However, even if you meet the minimum requirements for a loan, you will not be approved unless you can prove that you can afford the repayments. Lenders determine this by looking at your income, your debts and the stability of your employment.

Step 3: Application

The application process for a personal loan differs between lenders. Generally, you will have the option of applying online, in-branch (if the lender has branches) or over the phone. You can find a list of the documents and information required to complete the personal loan application on Finder's individual lender review pages or on the lender's website. You may be asked to provide any of the following:

• ID. You will need to provide your driver's licence, passport or a form of photo ID.
• Proof of income. Depending on the lender, you'll need three to six months of payslips and bank statements, and two years of tax returns if you're self-employed. If you receive Centrelink payments, you will need receipts to show your income.
• Other financial documents. If you have other debts, such as loans or credit cards, you will need statements from those accounts.

Online applications usually take about 15 minutes to complete.

Step 4: Approval

Some lenders can give you an answer instantly while others may take a few days or weeks to approve you. There are two forms of approval: full approval and conditional approval.

Conditional approval usually takes less time but is given pending more information from you. This includes information such as additional payslips or documents relating to your assets or debts. Lenders may also ask for this information and not offer any conditional approval. This is to help them make a more informed lending decision.

Full approval is given when you have supplied sufficient information for the lender to make a decision and the lender has approved you for the loan.

Step 5: Loan funding

Your loan can be funded in a number of ways, depending on the type of loan it is and what you're using it for. For example, when you take out a car loan, the lender may pay the car seller directly. This is also often the case with a debt consolidation loan, as lenders may opt to direct funds to your debtors, rather than to you.

If the loan is an unsecured personal loan, the funds will be sent to an account that you nominate. Some lenders can transfer funds on the same day you apply, while others might take a few days following approval.

Step 6: Repayment

Most lenders will allow you to choose your repayment structure – either weekly, fortnightly or monthly repayments. Generally, the more often you repay your loan, the less interest you will pay over the life of the loan. Therefore, when choosing your repayment structure, you may want to consider additional and early repayments.

• Find out if your lender will charge you fees for additional repayments
• Check if your lender has restrictions on how much you can repay extra per year (generally fixed rate personal loans have this)
• If you're planning to repay your loan early, check if there is a penalty for doing so

Step 7: Loan closure

If you are making your repayments as set out in your loan contract, then your loan should be closed following your final repayment. However, if you are planning to repay your loan early, it's a good idea to call the lender and get a final payout figure if you're getting close to paying off your loan. This is to ensure that the loan will be closed when you make your final payment and you won't be charged any unexpected interest.

Finding the right personal loan

It might sound a bit obvious, but you do need to make sure that the personal loan you choose is the very best one that is going to suit your finances and your ability to pay the loan back. After all, you don't want to pay more money than you need, or worse impact your credit score by taking on a loan you cannot realistically pay back in the time allocated. To figure this out, we'll explain how personal loans work and what are the types of loans available so choosing one should be a snap.

Why is there an interest rate AND a comparison rate?

While the interest rate is usually the magic number that grabs the headlines when looking at a loan, it's actually the comparison rate that is a much more useful number to look for, and it's one that will give you the best information about what you can expect to pay.

So what's so special about the comparison rate and how does it differ to the interest rate? The big difference is that the comparison rate includes all the other costs that come with the loan. It includes the interest rate plus any fees.

Imagine you are looking at an interest rate of 12.45% - this sounds good to you until you then take a look at the loan's comparison rate which is 14.52%. Why the difference? Because this particular loan comes with additional fees. On the other hand if you see a loan with an interest rate of 10.13% p.a and the comparison rate is also 10.13% then you'll know there are no extra fees and charges that will be added on top of the interest rate.

Comparison rates may be calculated differently depending on the loan. However, if they are provided, it needs to be disclosed how they are calculated. For example, it may be calculated on a personal loan of $30,000 over 5 years.

Should I still check the interest rate?

Absolutely! Interest rates are still an important part of your personal loan. For example, your outstanding balance will be charged interest calculated using the interest rate, not the comparison rate. It's vital that you know what the rate is and whether it's competitive. While comparison rates are there to give you a comprehensive overall idea of what you are in for financially with the loan. The interest rate is what you will be charged during your loan term (minus fees of course).

It's worth mentioning that the interest rate a lender advertises can be different from the interest rate you actually end up paying. During the application process lenders will factor in things like your credit score, the amount your borrowing, any existing debts you might have plus how much you earn when deciding your rate.

Read our guide to learn more about how your interest rate is determined

How do I choose a personal loan?

What makes a loan competitive

If you plan to take out a loan, you want to know you've taken out the best one available for you. So what should you look for?

• A competitive interest rate?

  Personal loans come with two types of interest rates: fixed or variable. Fixed interest rates on personal loans remain the same throughout the specified term, which may be for the entire loan term or for an introductory period. If you opt for a variable rate personal loan you will receive the advertised rate, but this rate may change throughout the loan term depending on interest rate movements in the market. So make sure you are comparing apples with apples across similar loans to make sure you're getting the best deal. If the loan is risk-based, you'll receive a rate based on your credit history and your general risk profile.

• What are the fees and charges?

  You'll need to consider both ongoing fees and the fees that are charged when your loan starts. Common fees include an application fee, exit fee or loan set-up fee, while monthly fees and annual fees are common ongoing fees. You might also be charged to use additional features of the loan so check out those too or ask the lender before you go ahead. A great idea is to keep an eye out to see if you're eligible for cost savings such as fee waivers that can help reduce the cost of the loan, every little bit counts.

• Is the loan flexible?

  How often are you able to make repayments? Are you able to make additional repayments or pay off the loan early without penalty? Is there a redraw facility if you do make early repayments? Some loans are inflexible in their terms and how repayments are made so if you need that flex - check it's possible with the loan you are interested in.

• Is the repayment time set by the loan realistic for you to pay back?

  Personal loans are usually offered for terms of between one and seven years, with other loans on offer for shorter time periods. Some lenders are more restrictive than others when it comes to how long you have to repay your loan – for instance, only offering terms of one, three or five years. Make sure the loan terms on offer are what you need. Long term loans over seven years might offer lower repayments but you'll be paying a more interest over that period of time.

Who is eligible for a personal loan?

Eligibility for personal loans depends on a few different things:

• If you have a low income. Applicants with low incomes can still be approved for low income personal loans. It's always a good idea to check the borrowing requirements and check your repayments with a calculator.
• If you're a pensioner. Applicants who are currently receiving pension payments have the option of getting a personal loan for pensioners.
• If you receive Centrelink payments. If you're receiving Centrelink payments or other benefits, you can still be eligible for a loan for people on Centrelink payments. However, it's important to make sure you can meet the repayments before applying.
• If you have bad credit. You're still able to apply for certain personal loans if you have negative marks on your credit file. You might end up paying a higher interest rate on these loans, so it's important to compare a range of bad credit personal loan offers before applying.
• If you have existing credit card or personal loan debt. You may still be approved for a new personal loan if this is the case, but you should calculate your repayments and your debt levels before continuing.
• If you don't meet the minimum requirements. You still might be able to apply with a guarantor. This is where someone, usually a family member such as a parent, agrees to 'guarantee' your personal loan should you fail to meet your obligations.

What documents will I need when applying for a loan?

Each bank and institution have their own criteria that you will have to meet to finalise your loan application.

• Proof of identification

  You will usually need any of the following to prove your identity:

  • Three payslips
  • Bank statements
  • Two years of tax returns (if self-employed)

• Other documents

  You may also need any of the following documents:

  • Statements from other loan accounts/credit cards

• If you're applying for a car loan

  Applying for a car loan requires various documents to have the car verified:

  • VIN or chassis number, engine number and registration plate details
  • The car dealers contact information or the sellers contact details if a private sale
  • Tax invoice and receipt for the car or purchase price if a private sale
  • Your CTP insurance and comprehensive insurance details.

How to apply for a personal loan

💵 Work out how much you need to borrow.

🔓 Choose a secured or unsecured loan.

📅 Decide between a fixed or variable rate.

📝 Choose your terms.

🔎 Start your personal loan research and comparison.

📱 Click through and apply.

How can I improve my chances of the loan being approved?

There is no way to guarantee you're approved for a loan, but giving yourself the best chance at being approved starts with meeting the eligibility criteria set by the lender. Here are some top tips.

• Work out your borrowing capacity. Be realistic. What repayments can you afford? Lenders will use a variety of criteria to decide how much you're eligible to borrow, but you really need to be really realistic about what you can afford to repay.
• Maintain or good credit score or start to build one. Make sure you keep track of all your payments, from credit cards to utility bills, because any arrears, debts, or missed payments can bring your credit score down. the lower your score the less likely you will be approved for a loan. If you already have a poor credit score you can start improving it by limiting credit applications, paying bills on time and bring down any limits on your credit card. It can take a while but these are all good tactics to improve that credit score.
• Keep track of your saving goals. If you manage to contribute to your savings regularly, it shows lenders that you are likely to manage ongoing loan repayments.

Read our guide on common loan rejection reasons and how to get around them

Frequently asked questions about personal loans

Still have questions? We've done our best to answer the most common questions people have when taking out a personal loan.

How quickly can I get the money from my personal loan?

Different lenders can have your loan amount transferred to you within different amounts of time. Some banks are able to offer existing customers same-day personal loans, and some payday lenders can have loan amounts transferred to new customers within an hour of approval. If you are in need of the cash as soon as possible it is advisable to check to see how long it will take to receive your loan amount before you apply.

What is the average interest rate on a personal loan?

The average interest rate depends largely on what type of loan you're applying for. If you get an unsecured loan the average interest rate is around 12-14% p.a. while a secured personal loan is between 8-12% p.a. If you opt for a peer-to-peer or risk-based lender the interest rate you receive will depend on your perceived risk.

How do I get an interest rate quote from a lender?

The most important thing about getting an interest rate quote from a personal loan lender is ensuring your credit score will not be affected in the process. Most lenders offering interest rate quotes for personal loans call it something along the lines of a "Rate Estimate" or "Rate Quote" but will clearly state that it will not affect your score.

What can the lender do if you fail to repay a secured personal loan?

Secured loans, as the name suggests, means that you offer something of value as security on the loan. If you don't pay you may find the bank will repossess your car and sell it.

I'm having trouble repaying my loan – what do I do?

If you are having trouble repaying your loan you'll need to get in contact with your lender. They may be able to organise a payment plan with you, or be able to offer you some sort of option to help you manage your repayments. You also have the option of getting in touch with a free financial counsellor on 1800 007 007 to help you organise a budget.

Do I have to tell the lender what I'm using the money for?

The answer to this question depends on what type of loan you are getting. If you are getting a secured car loan then all details of the car and finance agreement and registration must be given to the bank or lender before you receive the money. However, if you are getting an unsecured personal loan, then you only need to give a general idea of the loan purpose to the bank. If you are consolidating debts then you'll have to give details of your other loans and credits to the institution.

Can I take out a personal loan to cover a valuation shortage or to pay LMI?

If you've been approved for a home loan that falls short of your chosen property's valuation you may be considering if it's worth it to apply for a personal loan. Personal loans might also be on the table to cover LMI. While this is an option, you need to consider if you will be approved for your personal loan (consider the home loan you've been approved for) and whether you can afford the repayments on top of what you'll be paying towards your mortgage.

What's the difference between a credit union personal loan and a bank personal loan?

Credit unions are different to banks in that they operate in a not-for-profit business model. Typically you will find there are not as many fees or charges with a credit union loan which means the interest rate could be lower. Credit Unions are governed by the same regulations as banks so it's just as safe to apply for a credit union personal loan.

Why has the interest rate on my personal loan changed?

If you have a variable rate personal loan, then you may notice that your interest rate may go up or down. This could happen due to a range of factors but it mainly based on what the Reserve Bank of Australia dictates the official cash rate is. If you've found your rates have gone up, it may be a good time to consider refinancing your personal loan.

Is it safe to get a personal loan from Gumtree?

If you have bad credit and are worried that you may not get a loan from a bank or credit union, you may see ads for personal loans on Gumtree and want to apply. As with any form of finance you should always do your due diligence before applying. You should always check for an Australian Credit Licence and research the lender thoroughly. Alternatively, you could consider a no credit check personal loan lender.

What's the difference between short term loans and personal loans?

Whilst a short term loan, also known as a payday loan is a type of personal loan, there are a range of differences that make this type of lending completely different. Personal loans are generally taken out over one to seven years, whereas a payday is between 16 days and one year. Payday loans are also for smaller amounts – between $100 and $5,000 – and are available to those with bad credit.

How much should I borrow?

Personal loans can vary greatly in size from $1,000 and upwards of $80,000. If you're purchasing an asset such as a car keep in mind you may need funds to cover insurance. Many banks and lenders will consider up to $20,000 and $30,000 to be a medium sized loan. If you are only going to borrow between $10,000 and $20,000 then a small personal loan may suit your needs better.

What is loan protection insurance and do I need it?

Many lenders offer loan protection insurance as an add-on to your personal loan. This insurance can pay the minimum repayments on your personal loan if you lose your job, or cannot work because of illness or injury. You usually apply for the insurance when you are approved for the loan but you may be able to get the insurance further into the loan term.

How do I repay a personal loan?

Once you've actually successfully applied and received your funds, it's important to keep your loan up to date. If you've applied for a loan with the bank your everyday account is with, then you will probably have automatic direct debit setup. If your loan is with a separate institution then it is a good idea to set up an automatic transfer via internet banking a few days before your due date to allow for processing times. You'll be able to check your balance, interest rate, repayment dates and schedules. You should login to your loan account regularly to check notifications and payments details. If you want to make additional payments then you could do this by internet transfers, BPAY or if your bank allows it – over the counter deposits. If you miss a payment due to insufficient funds then it is important to call the bank and attempt to rectify the situation as soon as possible.

What happens to my application fee if I don't get the loan?

This a common concern for anyone applying for financial products that have an application fee. Before you apply you should confirm this in the PDS, but as a general rule, the fee will be charged only when you are approved for the loan and is often debited from your loan account. To be sure, check the product disclosure statement (PDS) for the loan.

Can I use a personal loan for equipment finance and small business needs?

Yes, personal loans can help with your business needs too. You can access personal financing to help cover business needs — everything from trucks to equipment can be purchased or even leased with a personal loan. The same is true even if you have bad credit. Business vehicles including company cars, trucks or vans can all be financed with a personal loan. If your business requires specific equipment to purchase or lease, such as forklifts, earthmoving equipment, workshop machinery, or even office equipment, you can take out a personal loan to help cover the costs. You won't have to hurt your business' cash flow to make the purchase.