Compare Personal Loans

With iSelect you can compare personal loans available from a range of products and providers, and select the one which suits you*. Once you click out to your chosen lender, you can begin the formal process of applying for a personal loan.

The lender will typically require more information, such as your employment status, income, and whether you have any dependents. As part of the process of applying for a personal loan, the lender will also perform a credit check to get an impression of your credit history. Depending on the contents of your credit report, the lender may accept or decline your application, or there may be some additional changes to your loan agreement, such as the interest rate and whether or not the loan needs to be secured, before the agreement is signed and funds settled.

Unfortunately, there is no “best” personal loan or even a “cheapest” personal loan. Finding a loan that’s suitable for you can depend on a range of factors, which is why it’s beneficial to compare products from different lenders*.

Additionally, a product which looks “cheap” because it has a lower advertised interest rate, could actually end up being more expensive than another product with a lower advertised rate, due to other hidden fees and charges. So it’s always worthwhileto review the comparison rate, additional fees , as well as the terms and conditions of the product before making a decision.

As with any financial product, it can pay to compare different lenders, products, and offers to ensure you find a good deal*. However, it’s worthwhile to really understand the product you decide on, as sometimes a great ‘introductory offer’ might not come with the features and flexibility that suits you over the life of the loan.

Here are some additional tips for finding a good deal on your personal loan:

• Compare products: Use a comparison service like iSelect to compare different products from a range of providers at no added cost to you*
• Look at the comparison rate: As this figure could give you a more accurate view of loan costs, including both the interest rate and additional fees
• Consider the loan term: The length of the loan term can also give you an idea how long you’ll be required to make ongoing loan repayments. Whether you select a loan with a longer or shorter term can impact the size of your regular repayments, which could in turn affect your ability to comfortably meet your repayment obligations.

As part of your application process, lender’s will perform a credit check to understand your level of credit risk. A licensed credit agency will provide the lender with a list of any loans or credit products you’ve taken out in the past, including unsuccessful applications, and how you managed repayments on those products.

If the lender sees that you’ve defaulted on loans, declared bankruptcy, are currently managing several credit products, have made a large number of applications to different credit products in a short period of time, or have a history of failing to make repayments, then this could negatively affect your application for a personal loan. In short, a poor credit history could result in a rejected application, a higher interest rate, or the lender requesting an asset to be used to secure the loan.

Personal loans can be used for a number of different purposes, such as financing a new car, funding renovations, or having the funds to purchase that dream boat! However, some personal loans may come with a contractual agreement that the funds are used for a specific reason.

For example, secured personal loans typically require that the asset being purchased (such as a new car, boat, or motorcycle) is also used as collateral to secure the loan. Some of the common examples of what personal loans are used for can include:

• Purchasing new or used car
• Purchasing a motorcycle
• Purchasing a boat
• Paying student loans
• Debt consolidation
• Financing home renovations
• Funding a holiday
• Buying shares
• Paying medical bills
• Paying for a wedding

Interest payments on personal loans work more like home loans than say, a credit card. That is, interest is typically calculated on the total outstanding balance of the loan. Generally, your monthly, fortnightly, or weekly loan repayment includes the minimum repayment plus interest (which is expressed as a percentage of the total outstanding balance), as well as any included fees or charges.

Additionally, personal loan interest rates can either be fixed or variable.

• Fixed interest: this means that your agreed interest rate won’t change over the life of the loan, allowing you to more easily plan what your repayments could look like over the loan term. Typically with this type of loan, you’ll incur charges if you want to make early or additional repayments towards the loan.
• Variable interest: this means that your interest rate could change over the life of the loan. For example, if you started on a 5% interest rate, then over the loan term if could potentially reduce to 4% interest or below, but it could also rise to 6% or above at the lender’s discretion. Typically with this type of loan, you’re able to make early and additional repayments at no extra charge, and you may even be able to access a redraw facility.
• Credit Score: It’s important to note that some lender’s can vary the offered interest rate depending on the nature of your credit history. Whilst processing your application, lender’s typically request a credit report from one of several licensed credit reporting agencies. In some cases, an excellent credit history can attract a lower interest rate, and vice versa.

Some personal loans can come with a redraw facility, depending on the product and lender you decide on. A redraw facility works by allowing you to make payments towards your loan over and above your minimum obligations, whilst also allowing you to withdraw (or ‘redraw’) those funds back for your own use if needed. This can have the added benefit of reducing the amount of interest you’ll have to repay over the life of the loan, and also give you the flexibility to potentially pay your loan off faster, or even withdraw the funds if you require them.

However, a redraw facility could also come with additional fees, so it’s beneficial to understand the terms and conditions before selecting a product. It’s also worth noting that redraw facilities are typically more common across variable interest rate products as opposed to fixed interest.

When comparing personal loans, you’ll likely come across loan products which are either secured or unsecured.

• Secured personal loan: this loan type which requires an asset to be provided as collateral for the loan. For example, if you’re using the loan to purchase a new car, then the lender may require the purchased vehicle be used to ‘secure’ the loan. One of the benefits is that secured loans typically come with a lower interest rate because they’re viewed as lower risk to lenders, however you run the risk of losing the asset if you default on your loan.
• Unsecured personal loan: This loan product does not require an asset to be used as collateral to secure the loan. Because the lender doesn’t have an asset which they can repossess to recoup losses if you default, unsecured products tend to be viewed as riskier by lenders, and can oftentimes attract a higher interest rate than secured loans

Personal loans can come with a range of different fees and charges. These fees are at the lender’s discretion, and can vary considerably across both products and lenders. It’s worthwhile to weigh up all of the fees, as well as interest rates, to ensure you understand the full cost of the loan. Alternatively, you can look at the comparison rate to get a better view of the overall cost of different loans you’re comparing.

Some of the potential fees include:

• Sign-up or application fees
• Missed or late repayment fees
• Early repayment fees
• Monthly fee

What are some of the risks of taking out a personal loan?

Finding a good deal on your personal loan by comparing a range of products, and ensuring you select a loan amount with repayments you’re able to comfortably manage along with your other expenses is a good way to lower the financial burden you’re taking on. That said, personal loans, like any credit product, are not without their risks.

Some of these risks include:

• Increased debt
• Potentially losing an asset if the loan is secured and you default on payments
• Negatively impact credit score, and potentially decreased chances of being able to obtain credit in the future if you miss repayments or default on your loan

When comparing personal loan products, it’s worthwhile to select a product with terms and conditions that aren’t going to stretch you financially. Not only can missing repayments or even defaulting on your loan lead to increased debt, but they can hurt your credit score, potentially making it even more difficult to secure credit in the future.

However, if you do find you’re struggling to make repayments, you might consider speaking to your lender as soon as possible. They may be able to take action to provide financial hardship assistance such as by arranging changes to your agreement that make it easier for you to manage repayments.