Personal loan comparison, personal loan reviews and loan repayment calculators can all give some insight into loan products, but where should you start when choosing a lender?
If you’re thinking of taking out a personal loan in the near future, but aren’t sure where to start, you’re not alone. In Australia alone, there are so many personal loan providers to choose from that it can all be a bit overwhelming and confusing. So, how do you know which lender and loan are right for you?
Taking the time to do a personal loan comparison to see which options are best will do your personal loan search a world of good. Not too sure what to look for in prospective lenders? Not to worry, Oiyo can help.
What are personal loans?
Personal loans are small secured or unsecured loans that someone will take out for – you guessed it – personal reasons. A personal loan can vary in amounts and can range from small personal loans of around $300, all the way up to much larger personal loans of $50,000 or more. The length of a personal loan or the loan term can also vary and will usually be dependent on the lender and the loan amount. Generally, your repayment period or loan length can range from 6-months or so all the way up to 7-years.
What can personal loans be used for?
Personal loans can be used for a huge variety of different reasons. The beauty of a personal loan is the fact that they’re just that. Personal. This means that they’re versatile, flexible and can generally work for almost anything you need them for, provided the lender deems a personal loan a suitable solution for you.
People will apply for personal loans for any number of different reasons. Take a look at just some of the reasons why people apply for personal loans:
- Medical loans
- Holiday loans
- New furniture loans
- Travel costs
- Debt consolidation
- Bad credit debt consolidation
- Dental loans
- Wedding loans
- Electricity bills
- Car refinancing loans
- Home repairs
- Short term loans
- Appliance upgrades
- Kitchen upgrades
- Emergency loans
- Unexpected utility bills
- Family holiday costs
- Bathroom upgrades
- Birthday and celebration costs
- IVF costs
- Unexpected travel costs
- New whitegoods loans
- Funeral costs
- Business start-up costs
- Business overhead costs
- Car or bike restoration costs
- Car loans
- Motorbike loans
- Business loans
- Caravan or motorhome loans
- Car repair loans
- Car registration costs
- Home renovations
That’s just the tip of the iceberg – there are likely many more planned and unexpected expenses that personal loans help cover the costs of.
What’s the difference between unsecured and secured loans?
There are several key differences between unsecured and secured loans that are important to take note of. If you’re not too sure which would be best suited for you, a personal loan comparison is a great place to start to see which would fit your situation best.
Secured loans
A secured personal loan is a loan that is secured by an item of collateral, usually a vehicle of some kind. This collateral is an effective way for the lenders to secure the loan and ensure that it will be paid successfully. If something were to happen and the borrower was unable to repay the loan successfully the lender would have the right to take possession of the collateral and use it to repay the loan if no other alternatives were viable. This typically means there is less risk for the lender.
Due to having the collateral securing the loan, secured loans are generally able to be approved for much larger amounts than unsecured loans.
Unsecured loans
Unsecured loans are personal loans where the borrower does not provide an asset or collateral for security. Due to being unsecured, if you were to default on the loan, the lender does not have an asset or item of collateral to use to pay off the loan so they are at more risk with this type of loan. Lenders will typically look at the strength of your cash flow, your credit score and your relationship with money when assessing you for an unsecured personal loan, with your credit score taking precedence as a key indicator as to whether you’re likely to pay off your loan timeously.
As this type of loan is unsecured, they are generally offered for smaller amounts than a secured loan would be.
Personal loan comparison Australia-wide: How can they help?
When you’re looking at your different loan options and you’re not too sure which to apply for or what type to choose, comparing loans can be an invaluable activity in helping you choose the right product and lender for yourself. Taking a good, hard look at all the pros and cons of different lenders can make it easier to break them down. With so many options out there, it’s easy to become overwhelmed. A personal loan comparison helps to prevent this confusion so you can make a strong and informed choice.
What to look out for in a personal loan comparison of lenders
When undertaking a personal loan comparison between lenders, it’s important to have a look at a few key aspects of the lenders and their loan products to help you make your decision. It’s a great idea to have a look at the following aspects of any lenders you’re considering to help you make an educated decision:
Personal loan interest rates
When you’re looking at different lenders, it’s always a good idea to have a look at the personal loan rate comparison that the lender is offering. Regardless of whether you’re applying with a traditional lender such as a bank or credit union, or a specialist personal loan lender, the interest rates that are on offer will vary dramatically. You obviously want to save yourself as much money on interest rates as possible so spend a bit of time looking at different lenders to see who offers the most competitive interest rate.
What other fees will you be charged
Taking a look at what other fees you might be charged on top of your interest rate is important as sometimes these can be substantial. You don’t want to secure yourself a great interest rate only to be hit with multiple unexpected fees that you were not expecting. This can end up making the loan much more expensive than it first seemed and you could lose a lot of money. Generally, you might expect fees similar to the following:
- Establishment fee
- Monthly fees
- Missed repayment fee
- Declined repayment fee
- Annual fees
- Account keeping fees
- Additional repayment fees
These are just some of the fees you could be charged, so make sure that you’re well aware of any and all fees beforehand by conducting a thorough personal loan comparison and save yourself the shock of unexpected costs.
Repayment flexibility
Does the lender you’re considering allow you to make extra repayments free of charge or do they charge an additional repayment fee? If you were considering paying your loan off early by putting extra repayments down this will be important to double-check as some lenders may hit you with a hefty fee for paying extra on your loan. Having the ability to pay your loan off early if you want to without additional fee is an option you definitely want.
Existing customer reviews
This is definitely an important aspect to have a look at. Existing online customer reviews will tell you so much about a company as they’re made by real verified clients of the prospective lenders. Other client’s experiences with the lenders will provide a plethora of useful information about the lender such as how they operate, what their customer service is like, how reasonable their loan products are and what they’re like to deal with in general. Take the time to go through a few reviews and see if the company is a company you would like to do business with.
Ranking methodology
Have the lenders been ranked by interest rate or are they haphazardly listed in a table of sorts? You’ll want to make sure you’re seeing relevant information as some comparison sites would put advertisers higher in display tables. Bottom line – if you’re going to the effort of finding the best loan for you, make sure you actually do.
The benefits of a personal loan comparison calculator
A personal loan comparison calculator is an invaluable tool that you can usually find at the top of most lenders websites. They’re a great way to get a general estimate on how much different loans might cost you over the life of the loan and what your possible repayments may look like. While this is only a general indicator as the lender will tailor repayments and loan term to your personal circumstances, it’s a good way to get a feel for different lenders.
Take the time to have a look at a personal loan comparison calculator Australia and see if the repayment amounts are within your budget before you take the time to apply. Not only will this give you a great indication of whether or not you can fit the repayments into your budget but it will save you a lot of time on personal loan applications that you may not necessarily be able to afford.
Ready to apply for a personal loan?
Applying for a personal loan can be a big move financially. It’s a big financial step that can be exciting and equally overwhelming. With so many lenders out there, it can be hard to know where to start. You want to make sure you’re getting the best product for your personal circumstances and don’t choose the wrong lender.
Rather than getting confused over the sheer number of potential lenders, take the hard work out of finance and utilise a personal loan comparison to get your loan journey started off right.
Looking for info on personal loans? Check out some of our latest articles for a range of helpful insights.