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Applying for a personal loan
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Personal loans in Australia – November 2024
Sean Callery
Editor
Today, the lowest interest rate on a personal loan in Australia is at 5.76% p.a. (comparison rate 6.55% p.a.). That's a fixed rate, unsecured personal loan. But the lowest rates can vary depending on the personal loan type. The thing to be aware of is that very few borrowers will be eligible for the very lowest personal loan rates. The average personal loan interest rate actually quoted to borrowers is 13.87% p.a., according to Money’s analysis of more than 10,000 personal loan requests. Your personalised rate is calculated by lenders based on factors like your credit score. Personal loan rates also fluctuate over time across the market.
Personal loans by the numbers
Average new personal loan
$22,643
Average personal loan term
3 years
Average monthly personal loan repayment (over 3 yrs)
$782
Total personal loan borrowing in Sept 2024
$2.81 billion
Sources: Personal loan data from real Money.com.au customers, ABS.
What will your personal loan interest rate be based on?
1. Your credit score
The best personal loan interest rates are generally reserved for borrowers with the highest credit scores.
Here are the average personal loan rates for different credit score bands, based on our analysis of more than 10,000 personal loan requests submitted through Money.com.au.
| Credit score range | Average personal loan interest rate |
|---|---|
853-1200 | 9.79% |
735-852 | 10.99% |
661-734 | 11.84% |
460-660 | 20.07% |
0-459 | 25.25% |
2. The loan amount
Higher loan amounts typically involve more risk for lenders, and can result in a higher interest rate.
3. The loan purpose
Some lenders charge higher rates if the loan purpose is deemed to be riskier. Debt consolidation loans are an example of a higher-risk personal loan purpose.
4. The loan term (duration)
Broadly speaking, our data suggests lenders offer cheaper personal loan rates on loans taken out over a longer period of time. The average rate on a five-year personal loan is 10.42% p.a., compared to 15.83% p.a. on a one-year term according to our analysis.
5. Your income
Our research consistently shows that higher income borrowers qualify for the lowest personal loan rates.
6. Your age
Our research clearly shows that younger borrowers pay a premium on their personal loan rate. Average rates gradually decrease the older the borrower is.
7. Your employment status
Full-time employees with a strong history in employment generally qualify for lower personal loan rates than part-time or casual workers.
8. Your living situation
Borrowers who own their own home are quoted cheaper personal loan rates on average than those who rent or live with parents. Homeowners with no mortgage get even cheaper rates on average than those with a home loan.
9. Your dependants
If you have dependents (e.g. children), you may pay a higher rate on your personal loan due to the impact on your expenses and the perceived greater risk this brings when lenders are calculating your rate.
10. Your other debts
If you have high levels of other debt (e.g. credit card debt), you will likely pay a higher rate than someone with lower levels of debt.
Getting the cheapest personal loans in Australia
The cheapest personal loan is the one with the lowest overall cost to you. That means getting the lowest combination of interest and fees over the life of the loan, with the flexibility to repay the loan as quickly as possible by making extra repayments. The personal loan with the lowest advertised interest rate won’t always be the cheapest. Compare personalised rates and use a personal loan calculator to estimate your actual costs before choosing a loan.
What are personal loans and what can you get?
A personal loan allows you to borrow a set amount of money and repay it plus interest and fees over a fixed time period.
Here’s what to expect with a personal loan:
- Borrow from $5,000 - $100,000
- Can be used for most large purchases or expenses
- Loan terms from 1 - 7 years
- Fixed or variable interest rates
- Interest rate tailored to you
- Weekly, fortnightly or monthly repayments
- Some loans allow for extra repayments and early payout
How much will your repayments be?
See your estimated personal loan repayments per week, fortnight or month.
Personal loan repayment calculator
What kind of personal loan should you get?
Fixed rate personal loan
This means you'll have the same interest rate for their entire term. Your repayments will stay the same which may make budgeting easier and you'll be protected from rate increases. However, there may be fees if you make extra repayments or repay your loan early.
Variable rate personal loan
The lender can change the interest rate at any time during the loan term. You could save if interest rates go down but your regular repayments could increase if rates go up. You generally have more flexibility to make extra repayments and repay the loan early without fees.
Secured personal loan
You may be able to get a lower interest rate by offering up an asset to sure the loan. If you can't repay the loan, the lender may reclaim the asset to cover its costs. A car loan is the most common type of secured personal loan.
Other kinds of assets are also commonly used – for example:
Unsecured personal loan
Most personal loans are unsecured, meaning the borrower does not put up an asset to back the loan. Unsecured personal loans are more flexible, but tend to be come with higher interest rates.
More personal loan options
There are also personal loan options for people in different financial situations.
How to get the best personal loan for YOU
As financial products go, personal loans are fairly straightforward. Here are the top factors to consider when comparing them:
1. Interest rate
Find the lowest interest rate you can. But remember, the personal loan interest rate a lender displays on its website probably won’t be the one you get. Your actual rate will be calculated based on your risk profile. Higher risk = higher rates.
2. Fees
These can really add up on some loans, but a lot of personal loan fees are avoidable. Look out for application fees, ongoing fees (monthly or annual), extra repayment fees and early payout fees (if you completely pay off the loan before the end of the term).
3. Comparison rate
When comparing personal loan deals, always look at the comparison rate. This is a better reflection cost of the total loan cost per year based on interest and most fees.
4. Loan term
A shorter term on your personal loan will save you money in interest. The catch? Your regular repayments will be higher. But if you can afford the repayments on a shorter term, it’s a big money saver.
5. Early repayment possible?
Even if you opt for a longer loan term, you may still be able to repay the loan early to save money. You’ll need to make sure the loan you choose allows: extra repayments without penalty fees and early payout with no penalty.
6. Your credit score
If your credit score is not in great shape, consider waiting until you have improved it. A low credit score will likely mean you need to pay a higher interest rate.
BONUS TIP: Is the lender reputable? Moneysmart advises watching out for loan offers that seem too good to be true, lenders offering no credit checks, loans that require an up-front deposit or your bank details, urgent offers that expire soon and unsolicited approaches. Always check that the lender you’re considering has a credit licence and is regulated by ASIC.
Am I eligible to get a personal loan?
You can apply for a personal loan in Australia if you are:
- Over the age of 18; and
- An Australian citizen or permanent resident; and
- Employed or have a regular source of income that's high enough to meet the repayments
What documents will you need?
You’ll need to provide ID and financial documents:
- Passport or driver licence
- Proof of income and expenses e.g. payslips, bank statements
- Details of any current debts or other loans
Lenders need these to assess your loan application and whether you can afford the repayments. If you can’t provide standard documents a low doc personal loan could be a suitable alternative.
Tips for getting your personal loan approved
-
Check the eligibility criteria closely Some lenders have age limits and a minimum income you must be earning. Your citizenship and residency status will matter too.
-
Check your credit score This will give you an idea of where you stand and whether you’ll be eligible for a personal loan.
-
Don't apply with multiple lenders This could negatively impact your credit score. Instead, compare rates and then apply with the lender offering the best deal you qualify for.
-
Don’t borrow more than you need Applying for just what you need will help you to get approved and make the loan more affordable.
What are the most common personal loan purposes?
By far the most common reason people take out a personal loan in Australia is to purchase a vehicle (59% of all loans), according to the loan requests received by Money. However, for unsecured loans, the most common purposes are:
Debt consolidation (23%) Home improvement (6%) Medical/dental loans (3%) Loans for travel (2%)
The remaining loan requests were made up of a mixture of other purposes, such as loans for investing, paying for a wedding, and covering vehicle repairs and other large bills.
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Personal loans FAQs
What personal loan interest rate will your credit score get you?
In simple terms, a higher credit score usually means a lower personal loan interest rate.
The calculation for the lender is that borrowers with a clean credit history are less risky. Lenders value certainty, and having reliable borrowers is appealing. So they offer lower rates to attract them.
An excellent credit score could get you one of the lowest personal loan interest rates on offer, between 6-9%. A borrower with a bad credit score could pay interest of 15-20% or even higher.
So it can be worth improving your credit score before you apply.
Remember, though, your credit score is just one of the factors lenders consider when calculating personal loan interest rates for their customers.
| Credit score range | Average personal loan interest rate |
|---|---|
853-1200 | 9.79% |
735-852 | 10.99% |
661-734 | 11.84% |
460-660 | 20.07% |
0-459 | 25.25% |
Which bank is best for personal loans?
No one bank or lender is the best when it comes to personal loans. The range of interest rates available from any one personal loan provider can be very wide, and what rate you actually qualify for will depend on your situation. Comparing rates from multiple providers will help ensure you get the best personal loan deal you can.
Which lender is easiest to get a personal loan from?
There are bad credit personal loan providers who will consider all borrowers (even those with a bad credit score) and typically offer a higher chance of approval. If you want a fast approval on your personal loan, online lenders generally offer the fastest turnaround.
Can I get a personal loan if I’m self-employed?
Yes, but you’ll still need to provide documentation to lenders to demonstrate your income and capacity to repay the loan. In general, you will need to provide tax returns in place of employee payslips. Self-employed borrowers will need to apply for a low-doc personal loan.
How fast is personal loan approval?
Approval speeds vary between lenders. In general, banks have the slowest approval speeds, while online lenders can offer same-day (some even offer instant approval) approval.
Can you buy a car with a personal loan?
Yes, but you should consider a specific secured car loan if the vehicle is less than seven years old. The age cut off can be higher with some lenders so it’s worth checking if the car you’re buying qualifies.
What else can I use a personal loan for?
If you qualify, you can get a personal for more or less and legal purpose. Other common reasons people take out a personal loan in Australia include home renovations, putting in a pool, and vehicle repairs.
Can you use a personal loan for a business?
You generally can't use a personal loan for business expenses. Instead you can apply for a specific business loan which may be better suited – such as a chattel mortgage for business vehicles, or a business line of credit for ongoing expenses.
Can you help me get a loan anywhere in Australia?
Most personal loan providers operate across the country and the process is done 100% online or via the phone.
All the lenders we work with all have Australian-based teams. So rest assured, when arranging your loan you'll be working with a lender in Australia.
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Loan Amount
Important information
^Comparison rate warning
Unless otherwise stated, personal loan comparison rates are calculated based on a loan amount of $30,000 repaid over a 5-year term. The comparison rates only apply to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan. Check with the provider for full loan details, including rates, fees, eligibility and terms and conditions to make sure the product is right for you.
Products, features and information displayed
General information only The information on this page is general in nature and has been prepared without considering your objectives, financial situation or needs. You should consider whether the information provided and the nature of any personal loan product is suitable for you and seek independent financial advice if necessary.
We are not providing you with a recommendation or suggestion about a particular personal loan. You should read the relevant disclosure statements or other offer documents before deciding whether to apply for or continue to use a particular product.
What products, features and information are shown While we make every effort to ensure all personal loans available in Australia are shown in our comparison tables, we do not guarantee that all products are included.
Our product comparisons may not compare all personal loan features and attributes relevant to you. Product information, such as interest rates, fees and charges, is subject to change without notice. Before acting on any information, you should confirm the relevant product information with the lender.
How personal loans are sorted and filtered by default Users can easily change the sort order and apply product filters to our product comparison tables. However, when you arrive on a page initially, by default personal loans are sorted by:
- Lowest loan interest rate, then;
- Lowest establishment fee, then;
- Lowest ongoing fee, then;
- Provider name (A-Z)
Personal Loans Available Through A Broker
Some personal loan products listed in our tables are available through a broker. These are the products with an option to ‘Check Eligibility on Money.com.au’. Brokers may not be able to offer loans from every provider and there may be more suitable loans for your personal circumstances.
Brokers are not authorised by Money's Australian Credit Licence and operate under their own Australian Credit Licence, or as a credit representative of another Australian Credit Licensee. Brokers can make recommendations about loan products that may suit your objectives, financial situation and needs.
Commission we may earn
Our tables feature all personal loans available from lenders on our database that match the search criteria selected. Lenders do not pay to feature in our tables, nor do we earn commission if you click to visit a lender’s website. The order of the products in the table is not influenced by any commercial arrangements.
If you get a personal loan as a result of visiting this page, we may earn a commission.
Sean Callery is the Editor of Money.com.au. He has over 15 years of international experience. He is qualified with a Certificate IV in Finance and Mortgage Broking (FNS40821) and is compliant to provide general advice in Tier 1 General Insurance (RG 146) products.
Shaun McGowan is the founder of Money.com.au. He's determined to help people and businesses pay as little as possible for financial products, through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.
Important information
^Comparison rate warning
Unless otherwise stated, personal loan comparison rates are calculated based on a loan amount of $30,000 repaid over a 5-year term. The comparison rates only apply to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan. Check with the provider for full loan details, including rates, fees, eligibility and terms and conditions to make sure the product is right for you.
Products, features and information displayed
General information only The information on this page is general in nature and has been prepared without considering your objectives, financial situation or needs. You should consider whether the information provided and the nature of any personal loan product is suitable for you and seek independent financial advice if necessary.
We are not providing you with a recommendation or suggestion about a particular personal loan. You should read the relevant disclosure statements or other offer documents before deciding whether to apply for or continue to use a particular product.
What products, features and information are shown While we make every effort to ensure all personal loans available in Australia are shown in our comparison tables, we do not guarantee that all products are included.
Our product comparisons may not compare all personal loan features and attributes relevant to you. Product information, such as interest rates, fees and charges, is subject to change without notice. Before acting on any information, you should confirm the relevant product information with the lender.
How personal loans are sorted and filtered by default Users can easily change the sort order and apply product filters to our product comparison tables. However, when you arrive on a page initially, by default personal loans are sorted by:
- Lowest loan interest rate, then;
- Lowest establishment fee, then;
- Lowest ongoing fee, then;
- Provider name (A-Z)
Personal Loans Available Through A Broker
Some personal loan products listed in our tables are available through a broker. These are the products with an option to ‘Check Eligibility on Money.com.au’. Brokers may not be able to offer loans from every provider and there may be more suitable loans for your personal circumstances. Brokers are not authorised by Money's Australian Credit Licence and operate under their own Australian Credit Licence, or as a credit representative of another Australian Credit Licensee. Brokers can make recommendations about loan products that may suit your objectives, financial situation and needs.
Commission we may earn
Our tables feature all personal loans available from lenders on our database that match the search criteria selected. Lenders do not pay to feature in our tables, nor do we earn commission if you click to visit a lender’s website. The order of the products in the table is not influenced by any commercial arrangements.
If you get a personal loan as a result of visiting this page, we may earn a commission.