If you’re looking for a personal loan, why not look online?
Online lenders are often able to offer a quick and easy application process as well as competitive rates and fees. This is because having no physical branch saves online lenders money, letting them pass the savings on to you.
What are online personal loans?
Online personal loans are a form of credit that can be applied for and managed online. These loans can be offered from a lender who operates solely online, or from a lender with physical branches who offers an online loan option to help you save on fees and rates.
Compare online personal loans
Types of online personal loans
Secured personal loan
A secured personal loan is usually used to finance a car and involves you attaching an asset to your loan that the bank can use as security in case of a default. There are some restrictions with these type of loans, including the requirement that you use the full loan amount to finance the nominated asset. Familiarise yourself with the terms and conditions of the loan before you apply.
Unsecured personal loan
This type of loan does not have the same restrictions as a secured personal loan as it does not require you to attach an asset as a guarantee. These loans usually have higher fees and rates as the lender is taking on more of a risk. The advantage is that you get to use the loan amount any way you choose.
A payday loan is a small loan that is lent for a short period of time, usually between 16 days and one year. The loan is meant to cover unexpected expenses which arise before payday, and your repayments are usually set up to coincide with the amount and frequency at which you are paid. These loans also offer flexible lending criteria and may be an option for people with bad credit.
Debt consolidation loan
These loans are taken out by people who want to consolidate existing debts. A debt consolidation loan can help people to better manage their repayments and may also save them money on interest and fees as they are now only paying for the one loan.
How to compare online personal loans
When comparing online personal loans there are a few different features to keep in mind. Here are some things to look at when weighing up your options:
- Fees. The fees charged on online personal loans are generally lower than other types of loans. This is mainly because an online lender has less overheads than lenders with physical branches. Consider the upfront fees of the loan that are charged to cover the costs of setting up your loan, as well as any ongoing fees that may be charged monthly or annually.
- Interest rates. When comparing interest rates on personal loans you should check whether the rate is variable or fixed, and whether the advertised rate is only applicable for an introductory offer period. Remember, low rates do not automatically mean a better loan, so consider the rates along with all the other features offered by the loan.
- Loan terms. The loan terms for online personal loans can range from as little as 16 days to as long as seven years depending on the type of loan you opt for. Be sure to choose a lender who offers loan terms that will be manageable for you.
- Loan amount. Remember to check whether the lender can offer you the amount you want to borrow. Some lenders may not be able to offer you the full advertised loan amount due to your credit history, which is the case with some payday providers, or over the value of your asset for a secured personal loan.
- Loan purpose. The reason you are applying for a personal loan should also help to inform your decision as to which lender to choose. For instance, if you are looking to finance a car then you might want to look at a secured personal loan, or if you have bad credit then you may want to consider a payday loan.
- Additional features. When comparing your online loan options you may notice that some lenders offer extra features with their loan, such as the option to bundle other financial products to receive a discount. Make yourself aware of all possible features so you can take advantage of the ones that appeal to you.
Pros and cons of online personal loans
- Applying and managing your loan online is a convenient way to keep track of your repayments
- An online lender is often able to offer you a loan with lower fees and rates
- There is no physical branch to discuss your loan options in person
- Disreputable lenders are sometimes harder to identify when they operate online
Things to consider about online personal loans
Before you commit to an online loan, you need to ensure that the lender is reputable and that the loan you’re getting is the right option for you while still being good value. To check the reputability of the lender, have a good look at their website and see how transparent they are with their information regarding fees and rates. You can also see how easy they are to contact, as you may need to speak to them about your loan later on. You can also look at third-party websites and read customer reviews to see other people’s experiences.
To ensure you are getting the best-value loan you should compare your options online before applying. Use our ‘How to compare’ section above to familiarise yourself with the features you should be looking for. You should also consider what your own needs are regarding the loan and what features you would like your loan to have. For instance, if you would like the option to make additional repayments throughout your loan, see if you are able to do this and also check if you will be charged a fee.
How to apply
To apply for an online personal loan you should always compare your options and follow the secure ‘Go to Site’ links on this page to your chosen lender’s website. You will need to provide certain personal and financial details, including information on your income, assets and debts. You will generally need to be over the age of 18 and a permanent Australian resident to be eligible to apply. Some lenders require you to have a good credit rating while others will let you apply as long as you receive a regular income into your bank account.