A personal loan is a type of credit specifically used for a purpose such as renovating a home, purchasing a vehicle, consolidating debt or financing a holiday. You borrow a certain amount of money from a bank or other financial institution in Australia and make regular repayments to the lender. Once the loan term ends, you have fully paid your loan. The loan term usually is between one and seven years depending on the bank and your qualifications for the loan. This article provides information on personal loans australia.
The interest rates charged on a personal loan are much less compared to credit card interest rates. You can negotiate the interest rate with your lender most of the time. Although credit cards have a higher interest rate, they are more flexible compared to a personal loan. A personal loan will not offer any additional benefits such as reward schemes, travel benefits, purchase protection, and warranties similar to a credit card. But a personal loan has a repayment schedule making it easier for you to incorporate the repayment into your budget. You can be confident that you will pay off the loan within the specific repayment period. You should check your credit report and credit score to assess your credit worthiness before applying for a personal loan with a qualified lender in Australia. There shouldn't be any errors in your credit report that could make your application rejected by the bank. You should also make it a point to read the entire contract when obtaining a personal loan so that you don't find unexpected interest rates or fees later on. There are different kinds of personal loans Australia. Here are some of the most popular loans on the market today.
Variable Personal Loans - This type of loan has an interest rate that could change with the fluctuations in the market. As such, your repayment may vary during the life of the loan. Most of the time, a variable loan will offer you the facility to make additional repayments to pay off the loan early.
Fixed Personal Loans - A fixed loan will charge a fixed interest rate. Hence, the repayment will not change during the entire loan period. It offers some stability to the borrower since he/she knows exactly how much to pay each month. That way they can take this information into account when budgeting. Most fixed loans will not allow you to repay the loan before the loan period ends. If you want to pay off the loan before the loan period, you may have to incur additional charges which will negate the benefit of early repayment. Fixed personal loans are quite popular with the majority of borrowers in Australia.
In conclusion, personal loans are very popular in Australia. There are different types of personal loans on the market today. Your credit score and credit report play an important part when applying for a personal loan. The above article provides information on personal loans in Australia.