The important guide to personal loans


A personal loan could help you get on with your real-life goals – including everything from renovating your home to planning that wedding, or even consolidating debt. If you’re considering a personal loan, read on as we answer common questions, outline the application process and discuss important things to look out for. 

What can I use a personal loan for?

Paying for a wedding, a once-in-a-lifetime holiday or furthering your education are popular reasons for getting a personal loan. You might want to complete some overdue home renovations, upgrade your kitchen or get a new (or used!) car. Personal loans can also pay for unexpected things like emergency medical expenses, or you may want to use it to consolidate debt. Ultimately, personal loans can provide financial freedom when your savings can’t quite cover it.  

What’s the difference between secured and unsecured personal loans?

secured loan is where the lender requires some sort of guarantee against the money you’re borrowing from them, like a car for example. Depending on your circumstances, the lender may provide lower interest rates compared to an unsecured loan.

With an unsecured loan, you’re approved based on the lender’s assessment of your ability to make repayments, rather than requiring additional security of an asset. Unsecured loan interest rates can potentially be higher.

Should I purchase outright or get a personal loan?

One way to help you decide is to try comparing the cost of credit with how much you can earn in savings over the same period of time and see which works out best in the long term.

For example, if you can get a great finance rate and the repayments fit easily into your monthly budget, you can keep your savings for your rainy-day fund or to invest in other things with a higher return. In some cases, the earning potential of the savings is greater than the cost of finance, making a personal loan a great option.

How can I get a personal loan?

There’s no doubting the power and potential of a personal loan, but it isn’t something that should be entered into lightly. Like any financial decision, there are important things to consider before you start applying.

How do I find out the interest rate?

We have a unique get my rate tool, which allows you to find out what your repayments might look like – before applying for your loan. You’ll need to provide a few personal details so we can access your credit file, however it won’t impact your credit score.

This can help you find out where you stand before deciding to apply for credit or not.

How do I choose a lender?

There are many ways to decide where to go for a personal loan, including a non-bank lender like Pepper Money or a more traditional lender like a big bank. Start by making a list of product features which are important to help narrow down the options.

For example:

  • Does the loan have any application and/or ongoing monthly fees?
  • Are there fees associated with paying off the loan quicker?
  • Would you consider providing security for the loan (e.g. a motor vehicle)?
  • Do you want a fixed or variable interest rate?
  • What loan term are you looking for?
  • What loan amount do you want?

Once you’ve chosen a lender, you can move onto the next step – applying for your personal loan.

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Disclaimer: It is designed for publication, to provide you with factual information only, and it is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, This is not accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on 0431579459.