There's a way you can get the best personal loan* – it's as easy as 1, 2, 3...
You could take out a personal loan for a range of different reasons. While one person might need a personal loan to buy a car, another might take one out for renovating a home or making a consolidating debt. There's a large amount of personal loans available, so, how do you find the best one?
HSBC Personal Loan Offer
Apply for a HSBC Personal Loan and get competitive interest rate offer with a flexible range of repayment options.
- Interest Rate From: 11.99% p.a.
- Comparison Rate: 12.54% p.a.
- Interest Rate Type: Fixed
- Application Fee: $150
- Minimum Loan Term: 1 year
- Maximum Loan Term: 5 year
- Minimum Loan Amount: $5,000
- Maximum Loan Amount: $50,000
Some of the best* personal loans you could apply for
The three-step process to help you find the best personal loan*
- What do you need?
Why are you applying for this loan? Do you want to buy a car, take a holiday or consolidate debt? Or, do you want to do a combination of these? You also need to work out what you need from your loan – flexibility with your repayments, that is, the ability to repay your loan early or make extra repayments when you need to. Do you want your loan as a lump sum or would you like to be able to draw on it as and when you need? Working all this out now will help you find the right loan in later steps.
- What is available?
Once you've decided what you need it's time to see what's out there and what's available to you. Compare the types of loan you want to apply for. Personal loans can be secured or unsecured, can be taken out in the form of a line of credit or an overdraft facility, and you can get loans with fixed or variable rates. Given that there are numerous options to choose from, the best personal loan for you will depend entirely on your personal situation. Compare different loan types according to their features and find one that offers you everything you need. Then, check the eligibility criteria to make sure you can apply for it.
- What does the loan cost?
After you've narrowed down the loan type and found loans that offer you the features you need, you need to find a loan you can afford. Check whether the loan charges a fixed or variable rate, look for upfront and ongoing fees and see how flexible the repayments are. Make sure the ongoing repayments will be affordable on your budget.
Once you've completed the third step, the only thing left to do is apply for the best personal loan that you've found*.
How you can compare the best personal loans* for your budget
When you want to apply for a personal loan you should first compare multiple offerings so you can track down the right product. Pay attention to the following aspects and you could enjoy considerable savings:
- Do you want a secured or unsecured loan?
If you get a secured personal loan, you stand to lose the asset you’ve used as a guarantee in the event you have a problem making repayments. An unsecured personal loan, on the other hand, offers no such risk but attracts a higher interest rate.
- What is the interest and comparison rate?
Not all personal loans offer the same interest rate, so compare the interest rates of multiple loans before signing on the dotted line.
- What are the fees and charges you'll be paying?
Some personal loans attract prepayment penalties, late charges can vary from loan to loan, and some even require you to pay application fees. Comparing these extra costs is important when you’re trying to determine the true cost of the loan.
- What will the term of your loan be?
While a lower interest rate might seem promising at first, you should also compare loan terms. This is simply because the shorter the loan’s duration, the less you pay in the form of interest over the life of the loan.
The good and the bad of finding the best personal loans*
- Online applications are easy and can offer quick turnaround
The application process is quick and the majority of lenders allow you to complete the whole process online. Some lender, including some major banks, offer same-day turnaround for personal loans.
- Range of personal loans available
You can choose from secured and unsecured personal loans as well as lines of credit, car loans and even peer-to-peer loans.
- You can get access to a competitive interest rate
If you compare interest rates of personal loans with credit card interest rates, you’ll see why people prefer personal loans over credit cards.
- You may not be approved
As some personal loans do not require any form of security, you can expect strict eligibility criteria. If you don’t have a good credit rating, your chances of approval are slim.
- The loan purpose might be restrictive
Depending on the type of personal loan you choose you may be restricted as to how you can use it.
Finding the best* loan
Many personal loans claim to be"'the best", and that's just what Sam found when she set out trying to find one. She needed to purchase some furniture for her house and also finance a holiday she was planning to take. She wanted to borrow $7,000.
She had good credit and a full-time job, and based on her salary of $50,000 p.a. (and her other expenses) she worked out she could comfortably afford repayments of $250 per month. She decides that an unsecured loan would best meet her needs as she wasn't purchasing an asset to attach it to nor did she own her own home.
As unsecured loans tend to have higher rates, she found one with minimal upfront and ongoing fees to help keep her costs down. She compared her options and found a loan with a comparison rate of 14.26% that she could repay in three years, making her repayments $241 a month. There was also no penalty for early repayment if she found herself able to repay it early.
What should I keep in mind?
While personal loans are helpful in many scenarios, it’s in your best interest to avoid certain traps and pitfalls.
- Read the fine print.
Scrutinise all your options carefully right from the start and remember to look for ongoing account-keeping fees, early repayment fees and late payment fees. Read the terms and conditions document from start to finish.
- Check the lender is licenced.
There are a number of credit brokers and providers in Australia who operate illegally. If you wish to safeguard your interests it is best that you do your research to avoid these lenders.
- Don't take on a loan you can't afford.
When borrowing money it is always important to use a calculator to find out what your repayments will be. If you can comfortably afford a loan don't feel tempted to consider borrowing more in the even that you can't afford it.
What to do when you apply for the best personal loans*
Before you apply for a personal loan, establish how much you want to borrow and your monthly repayment ability. You should find out how long it might take for you to pay the loan off completely, remembering that you can usually choose between making weekly, fortnightly or monthly payments.
If you’re buying an asset such as a car you can apply for a secured loan, where the car acts as collateral, and you then have to choose between a fixed or a variable rate. You can use finder.com.au to compare interest rates, fees, charges and term periods of different personal loans. Once you find a loan you wish to apply for, proceed to the lender’s website by clicking "Go to Site".
Remember that lenders will want to ensure your ability to repay a loan before they lend you any money. As a result, they might want to take a look at your credit file and may also ask for copies of your payslips, details of other loans you have, credit card bills and bank account statements.