personal loans

Compare Australian Personal Loans

Personal loans let you borrow a specific amount of money and repay the debt with interest in equal payments over an agreed term. Personal loans tend to be cheaper on average than, say, credit cards, which are seen as a typical alternative. 

If you’re looking to borrow money for a home renovation or new car, Mozo’s expert personal loan comparisons can help. There are more than 70 lenders in our database, making it easier for you to find the right loan for your needs. Start comparing below.

Personal loan comparisons on Mozo - last updated 22 June 2021

Search promoted personal loans below or do a full Mozo database search. Advertiser disclosure.
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    Mozo Experts Choice 2021
    No Fee Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.95% p.a.to 17.95% p.a.
    5.95% p.a.to 17.95% p.a.based on $30,000
    over 5 years

    Terms from 2 to 7 years. Representative example: a 5 year $30,000 loan at 5.95% would cost $34,757.21 including fees.

    Pay ZERO fees on loans up to $50,000 with NOW Finance. With no establishment fee, ongoing fees or early payout fee. What’s more, get your guaranteed, tailored interest rate in two minutes with no impact on your credit score! Winner of Mozo's Experts Choice Unsecured Personal Loan 2021 award.

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  • Hot DealMozo exclusive! A discounted rate of 5.40% p.a. for the first 12 months (comparison rate 6.36%) will apply for all eligible applicants
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    Mozo Experts Choice 2021
    Special Offer Low Rate Personal Loan

    Fixed, Unsecured, 12 Month Introductory Rate

    interest rate
    comparison rate
    Monthly repayment
    5.40% p.a.
    6.36% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.40% would cost $34,449.07 including fees.

    OurMoneyMarket offer competitive low rates on loans up to $75,000, plus free extra repayments and fee-free redraw facility. Winner of Mozo's Experts Choice Unsecured Personal Loan 2021 award.

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    Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    6.49% p.a.to 19.95% p.a.
    6.76% p.a.to 20.26% p.a.based on $30,000
    over 5 years

    Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 6.49% would cost $35,405.64 including fees.

    Low personalised rates, ideal for borrowers with excellent credit. No monthly account fees, no early payout fees, so you can pay off your loan sooner. Borrow between $5,000 and $63,000. Easy online application, receive a response in minutes and approved funds within 24-48 hours!

    Compare
    Go to site
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    Personal Loan

    interest rate
    comparison rate
    Monthly repayment
    6.25% p.a.to 19.95% p.a.
    7.64% p.a.to 21.35% p.a.based on $30,000
    over 5 years

    Terms from 1 to 5 years. Representative example: a 5 year $30,000 loan at 6.25% would cost $36,103.67 including fees.

    Enjoy flexibility with the ability to make additional repayments. Borrowers with excellent credit rating can receive interest rates as low as 6.25% fixed rate (7.64% comparison rate*). Loan terms between 1 to 5 years.

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    Unsecured Personal Loan

    Excellent Credit, Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.95% p.a.to 10.49% p.a.
    5.95% p.a.to 12.83% p.a.based on $10,000
    over 3 years

    Terms from 2 to 5 years. Representative example: a 3 year $10,000 loan at 5.95% would cost $10,943.74 including fees.

    Be rewarded for your good credit history with low rates. Plus there are no ongoing fees and you can pay off your loan with no early repayment penalties. Simply apply online and get a quote in minutes.

    Compare
    Go to site
    Details
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    Personal Loan

    interest rate
    comparison rate
    Monthly repayment
    6.75% p.a.
    7.10% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 6.75% would cost $35,680.23 including fees.

    Handypay offer flexible home improvement loans up to $75,000. Handypay is a specialist home improvement plan provider.

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    Details
  • Hot DealMozo Exclusive! A special low rate 5.44% for a limited time only (T&Cs apply)
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    Personal Loan

    Unsecured, Fixed, Excellent Credit

    interest rate
    comparison rate
    Monthly repayment
    5.44% p.a.to 7.49% p.a.
    5.44% p.a.to 8.19% p.a.based on $30,000
    over 5 years

    Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 5.44% would cost $34,332.26 including fees.

    With low rates for borrowers with excellent credit, a quick 1 minute rate estimate and simple online application, there’s a lot to love about this loan! You’ll not only benefit from no exit fees, there are also no early repayment fees. To qualify, simply earn above $25,000 and you’ll be on the way to start spending.

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    Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    5.35% p.a.to 24.79% p.a.
    6.14% p.a.to 25.74% p.a.based on $30,000
    over 5 years

    Terms from 1 to 5 years. Representative example: a 5 year $30,000 loan at 5.35% would cost $34,832.61 including fees.

    Fast, easy and 100% online, this is a low cost loan with no ongoing fees or extra repayment penalties. It's perfect for savvy borrowers with great credit. If you’re over 18 and earn above $30,000, you'll likely qualify.

    Compare
    Go to site
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    Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    9.39% p.a.
    9.64% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 9.39% would cost $37,881.66 including fees.

    No account keeping fees. Apply online and get a fast decision, normally within 24 hours. Winner of Mozo's Experts Choice Award for Australia's Best Large Credit Union 2020.

    Compare
    Go to site
    Details
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    No Fee Secured Personal Loan

    interest rate
    comparison rate
    Monthly repayment
    4.45% p.a.to 15.45% p.a.
    4.45% p.a.to 15.45% p.a.based on $30,000
    over 5 years

    Terms from 2 to 7 years. Representative example: a 5 year $30,000 loan at 4.45% would cost $33,516.53 including fees.

    Pay zero fees on loans up to $100,000 with NOW Finance. With no establishment fee, ongoing fees or early payout fee. What’s more, get your personalised interest rate in two minutes with no impact on your credit score!

    Compare
    Go to site
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    Mozo Experts Choice 2021
    Low Rate Personal Loan (Fixed, Unsecured)

    Excellent Credit

    interest rate
    comparison rate
    Monthly repayment
    6.29% p.a.to 8.48% p.a.
    6.36% p.a.to 8.69% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 6.29% would cost $35,192.28 including fees.

    OurMoneyMarket offer competitive low rates on loans up to $75,000, plus free extra repayments and fee-free redraw facility. Winner of Mozo's Experts Choice Unsecured Personal Loan 2021 award.

    Compare
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^See information about the Mozo Experts Choice Personal loans Awards

*WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different 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.

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

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Personal loan resources

Reviews, news, tips and guides to help find the best personal loan for you.

FAQ

June market update for Personal Loans

With June finally here, we’re now reaching the tail-end of the current financial year. Last month we were kept on our toes in terms of interest rate changes, so we’re quite eager to roll up our sleeves and dive into the latest personal loan happenings.

One trend that we’ve reported on countless times has been the rise in Australians taking out personal loans to fund home renovation plans in 2021. Additionally, we’ve seen a few new trends in the personal loan sphere.

As per the latest ABS Lending Indicators release, it appears that new loan commitments (seasonally adjusted) for fixed-term personal loans increased by 2.1% in March 2021. Interestingly, the release also noted that the value of new loan commitments for road vehicles shot up by 4.5%.

Top Personal loan lenders:

Following all the recent changes, the lenders with the lowest personal loan interest rates in the Mozo database are Alex, Australian Military Bank, Credit Union SA and Transport Mutual Credit Union. As per usual, smaller mutual banks and credit unions are where to go for a more competitive rate.

Big Bank personal loans:

While a few different big four bank rate changes have popped up over the last month, be aware that big bank personal loan interest rates tend to sit higher than most competitor lenders.

For example, the Commonwealth Bank’s Unsecured Variable Personal Loan interest rate currently sits just below 12% - quite a stretch from the lowest interest rate in the Mozo database, which sits at 4.15% p.a.

Variable rate big 4 personal loans:

At present, the ‘lowest big bank variable rate personal loan’ in the Mozo database is the NAB Personal Loan (Variable, Unsecured), which recently saw a 5.70% basis points cut on 21 April 2021 - bringing it down to 6.99% p.a. (7.91% p.a. comparison rate*).

At the other end of the scale, following ANZ’s recent rate cuts on 12 May 2021, the Commonwealth Bank Unsecured Variable Personal Loan now takes the cake for having the highest big bank variable rate in the Mozo database with its 11.50% p.a. (12.38% p.a. comparison rate*).

Fixed rate personal loans:

As for the lowest big bank fixed interest rate in the Mozo database, that belongs to NAB following its 5.70% basis-point cut to its Personal Loan (Fixed, Unsecured) on 21 April 2021, which now offers a 3-year fixed rate of 6.99% p.a. (7.91% p.a. comparison rate*).

Changes have been happening left, right and centre among fixed-rate personal loans. Last month we saw ANZ take NAB’s spot for having the highest big bank fixed rate in the Mozo database. However, this month, the title goes to Westpac for its (Fixed, Unsecured) Personal Loan, which has a 3-year fixed rate of 9.99% p.a. (11.16% p.a. comparison rate*).

Personal loan rates of note in June:

Read the full personal loans June market update here.

Written by: Rhianna Dews, Personal Loans writer, 1 June 2021.

Personal loans explained - A complete guide to all you need to know

Show transcript

Getting the best deal on your personal loan

Dreams. They come in all shapes and sizes: a dream wedding, a dream renovation, even a dream vehicle. But the reality is, dreams can be expensive, so you might think about a personal loan, to help you get there sooner. But how do you find the one that is right for you? To start with, you need to consider your current financial situation: how much you earn, your expenses and how much you can afford in loan repayments. Be careful not to overextend, because that could turn your dream, into a financial nightmare.

Your credit history will influence who you can borrow from, and sometimes also, the interest rate you can get. A personal loan with a fixed rate can help you budget month to month, by setting your repayments at a fixed amount and a variable rate may offer some flexibility, for example if you want to pay extra to help settle your loan sooner. Secured loans have an asset as security, while unsecured one don’t, which can influence the amount you borrow and your interest rate. And loans from challengers to the big banks, like peer-to-peer lenders, can offer more competitive rates.

So whatever your dream, if you choose a competitive interest rate and be sensible with the amount you borrow, a personal loan can be a great option to make that dream happen faster.

Head to Mozo.com.au to find out how you can get the best deal on a personal loan.

Finding the right personal loan for your needs is what we at Mozo are here to help you with. This handy guide will run you through all the factors to consider when looking for a competitive personal loan in Australia. Starting from the top...

What is a personal loan?

A personal loan allows you to borrow a lump sum of money and then repay that amount (plus interest on top) in instalments over a set period of time. Often, you’ll make monthly repayments over a period of 1 - 5 years.

A personal loan is generally for a lower amount than a home loan and is useful for lump sums between $2,000 and $100,000, which are too big to put on a credit card. 

It’s also useful because as long as you meet your monthly repayments, you’ll know how long you’ll have debt and approximately how much interest you’ll pay from the beginning.

What can a personal loan be used for?

In Australia, personal loans can be used to help fund all sorts of things. However, they're most commonly used for bigger expenses like holidays, home renovations or buying a new car.

They can also be used to consolidate debt or to pay for unexpected expenses like medical bills.

What you need the loan for might make a difference to what kind of loan you go for. For example, if you're after a personal loan for:

  • A car: Personal loans for cars, otherwise known as car loans, are often secured loans because you have an asset (the car you’re buying) to secure it against.
  • A holiday: If you’re after a personal loan for a holiday, on the other hand, you might want an unsecured option in case you don’t have a big asset to put up as collateral.
  • Debt consolidation: With a debt consolidation loan, it's ideal to go for one with a low rate and competitive fees, so you’ll have the best chance of paying it off.

How to compare personal loans:

There are many things to keep in mind when comparing personal loans, from the interest rate to fees to features and special offers. But to narrow it down, here are three of the main things to consider when comparing personal loans:

  • The comparison rate: The comparison rate factors in both the interest and fees you’ll be charged on the loan - so comparing personal loans based on the comparison rate and not just the headline rate gives you a more accurate idea of the full cost of the loan. Just be aware that the comparison rate is generally based on a set scenario (i.e. either a $30,000 loan paid off over 5 years or a $10,000 loan over 3 years) - so your actual loan might be slightly different.
  • Extra features: By having features like free extra repayments or a flexible repayment schedule, you give yourself the opportunity to pay off your loan earlier and save on interest. Just watch out for things like early break costs, which could make paying your loan off too early not so worth it.
  • Think about your credit rating: Some lenders offer a range of different interest rates depending on what kind of borrower you are. Generally, the better your credit score, the better the interest rate you’ll get. So, if you’ve got a great credit history, opting for a loan that offers tiered interest rates based on your credit score might help you snag a lower rate. Your credit rating can also determine what loans you’re approved for -  use our Mozo Rate Matcher to check out some loans you may be eligible for.

That’s the beginning of comparing personal loans, but keep in mind there's a range of other factors to consider, like loan terms and amounts.

How much can I borrow with a personal loan?

Good question. Here are 3 easy steps you can take to help determine how much you should borrow:

Step 1: Create a budget

While a lender may approve you for a large loan amount, that doesn't mean you should automatically take out that entire sum.

Use Mozo's budget calculator to help get a clearer picture of your current financial situation and determine how much money you have to play with after all your expenses (home loan repayments/rent, utility bills, insurance etc.) are taken out.

For example: 
Say you have a disposable income of $1,000. You'd then need to think about how much of that amount you're willing to part with to pay off your loan. Because if you take out a loan with a $900 monthly repayment, you might wind up having to live off tinned tuna for the life of the loan - and who wants to live like that?

Step 2: Work out your regular repayments

Once you've decided on a loan amount you're comfortable with, have a play around with our personal loan repayments calculator to see what kind of borrowing scenario would work for you.

If you find that the amount you're looking at borrowing will make your ongoing repayments far too steep, you might want to consider borrowing a smaller amount or opting for a longer-term.

For example: 
Say you borrowed $20,000 with a 10% interest rate. Using our personal loan repayments calculator, we found that your monthly repayments would be:

  • $923 paid back over 2 years, or...
  • $425 paid back over 5 years

Keep in mind that while the longer-term option might help take the financial pressure off each month, the downside is that you'd wind up paying $3,346 more in interest over the life of the loan.

monthly repayments on a personal loan

Step 3: Compare personal loans online

Once you've figured out how much you can afford to borrow, it's time to compare personal loans until you find one with a competitive interest rate and the right features to suit your individual needs.

Read on for our breakdown of the different types of personal loans in the market.

What types of personal loans are there?

While there are many different types of personal loans available in Australia (car loans, travel/holiday loans and renovation loans), they all more or less work the same way...

You borrow a lump sum from a lender and pay it back over an agreed timeframe (plus interest/fees).

  • The benefit for you: you can make your purchase now, without first having to save up the full amount
  • The benefit for the lender: they make a profit from the interest and fees you pay for their service

That being said, here are some of the different types of personal loans you'll have to choose from depending on your individual needs:

Secured personal loans:

With a secured loan, you'll need to put up your car, house or other expensive (eligible) asset as security against the loan. Why? For lower interest rates and fees, of course! Be aware that the provider has the right to seize your assets if you were to default on the loan.

Unsecured personal loans:

On the other hand, if you'd rather not risk losing your car or home, or just don't have any assets to secure your loan with, you could opt for an unsecured loan. But while unsecured loans don't require you to guarantee the loan with any assets, the tradeoff is often higher rates and fees.

Debt consolidation:

Another way you can use personal loans is to help ditch debt. A debt consolidation loan lets you combine multiple debts (from multiple loans or credit cards) into one loan. This way, you'll have just one regular repayment and interest rate to worry about for the lot instead of one for each debt.

What should I look for in a personal loan?

Once you've chosen a personal loan type to suit your borrowing needs, you'll need to think about the type of interest rate and features you want:

Interest rate types:

Choosing the right interest rate type to suit your individual needs and financial situation is vital when taking out a personal loan. Here are the two main options:

  • Fixed interest rate:

With a fixed rate loan, your interest rate stays the same for the life of your loan, making it easier to budget. An attractive option if you're worried about a rate hike down the track that you mightn't be able to afford.

Of course, there are a few cons, such as generally higher rates and fees, as well as less flexible features like extra repayments and redraw facility (see below for a full explanation). Plus, fixed rate loans often come with break cost fees if you decide to pay your loan off early.

  • Variable interest rate:

On the other hand, with a variable rate loan, your interest rate could change at any time, putting you at risk if your provider decides to hike up their personal loan variable rates. However, the benefit of a variable rate loan is that they often come with lower rates and fees and more flexible features.

fixed vs variable rate personal loan

Personal loan features:

The features that come with your personal loan are super important and shouldn't be overlooked. Here are some of the different features you might come across when comparing personal loans:

  • Extra repayments:

You never know where you'll be down the track financially. So it's good to have a personal loan with an extra repayments facility so you have the ability to make extra loan repayments when you can to help you pay your loan off earlier.

  • Redraw facility:

By the same token, you never know when you'll be hit up with unexpected bills, so another handy feature to have is a redraw facility, which allows you to dip into any extra loan repayments you've made. Although this defeats the purpose of making those extra repayments in the first place - so it's best to leave this for emergencies.

  • Flexible repayment frequency:

The beauty of having flexible repayment options is that you're able to tailor them to your regular pay schedule. So say if your employer pays you fortnightly, you might opt for fortnightly loan repayments to match.

Hack: One benefit to going with fortnightly repayments is that you'll wind up paying more off the loan within a year as opposed to with monthly repayments. 

For example, if your monthly repayments are $1,000, you'd pay off $12,000 in one year, whereas if your fortnightly repayments are $500, you'd pay off $13,000, as there are 26 fortnights in the year.

So, by going with fortnightly repayments you'd shave off an extra $1,000 for each year of the life of the loan, helping to speed up the process of paying off your loan.

How can I find the best personal loan for me?

Now that you're in the know about the types of personal loans out there and the different features to look for, you're probably wondering how you can land yourself a great deal. Follow these quick steps...

Step 1: Compare personal loans

  • Compare personal loans: You can kickstart your search with Mozo's free personal loan comparison tool.
  • Switch & save: Or if you're thinking of refinancing, you can use our switch & save calculator to see how your current personal loan compares with others in the Mozo database and find out which ones will save you the most in interest and fees.

Step 2: Make your shortlist

Once you've punched in your numbers, our personal loans calculators will bring up a list of loans that might suit what you're looking for based on your search query. 

You can then shortlist your favourites by clicking on the button on the left-hand corner of the product info.

Struggling to pick between two loans? Use our personal loan comparison calculator to compare them side by side.

Step 3: Start your personal loan application

Once you're picked the loan you're happy with (and eligible for) and are happy to apply, you can click the blue 'go to site' button next to the loan to be taken to the provider's website, where you can submit an online application.

If you're keen to start comparing personal loans, then scroll up to the comparison tool at the top of this page. Alternatively, if you want to know more about personal loans, head over to our personal loan guides hub.

Where should you go for a personal loan?

The right personal loan for you will depend on your own individual needs. The personal loan comparison table at the top of this page is a good place to start your search. Otherwise, you can click here to search through the whole Mozo personal loan database.

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JP Pelosi
Managing editor

Jean-Paul (JP) Pelosi is an experienced journalist and editor who has contributed to many of Australia's leading media outlets including The Guardian, News.com.au, Domain.com.au, Investment Magazine and ANZ's Bluenotes. He has also edited news and communications for large financial services companies such as CommBank, Suncorp, Allianz and Amex. He loves a well told story and applying his editorial experience to content that readers both care about and enjoy. JP heads up our writing team.

More personal loan FAQs

What is a personal loan? 

A personal loan allows you to borrow a lump sum of money and then repay that amount (plus interest on top) in instalments over a set period of time. Personal loans tend to be cheaper on average than, say, credit cards, which are seen as a typical alternative. 

 Is it a good idea to get a loan? 

A personal loan can be useful for lump sums between $2,000 and $100,000, which are too big to put on a credit card. It’s also useful because as long as you meet your monthly repayments, you’ll know how long you’ll have debt and approximately how much interest you’ll pay from the beginning. 

 What can a personal loan be used for? 

In Australia, personal loans can be used for pretty much whatever you need, though they are commonly used to fund an expensive item like a holiday, home renovation or new car. Personal loans can also be used to consolidate debt and to pay for unexpected expenses like medical bills. 

 How much can I potentially borrow with a personal loan? 

 Typical loan sums are between $2,000 and $100,000. While a lender may approve you for a considerable loan amount, that doesn't mean you should automatically take out that entire sum. Use Mozo's budget calculator to get a clear picture of your financial situation and determine how much money you have to play with after all your expenses. 

 What is the cheapest loan? 

As of March 2021, Australian Military Bank, Credit Union SA and Transport Mutual Credit Union offer the lowest personal loan interest rates in the Mozo database (Please note: these go across different loan categories and aren't all the same). Smaller mutual banks and credit unions are still where it’s at if you’re after a more competitive rate.

Check out our comparison page to see how big banks stack up against small lenders and find a loan that might suit your needs. 

What is the best personal loan available? 

According to Mozo's analysis of the personal loan market for the 2021 Mozo Experts Choice Awards, there are several loans of note. Some award-winners offering the best value in 2021 include Australian Military Bank, Alex, Endeavour Mutual Bank, ING and Hume Bank.

To learn more, you can read product reviews of Australia's Best Personal Loans or view the full list of Mozo Experts Choice Personal Loan Award winners.

Do I need to provide security to get a personal loan?

This will depend on the type of loan you apply for. If you apply for a secured personal loan, you'll have to provide an asset, like a car, to use as security against the loan. Although this does give your lender the right to repossess your asset if you default on the loan, the good news is secured personal loans typically come with lower rates.

On the other hand, if you opt for an unsecured personal loan, you won’t have to provide any security. However, unsecured personal loans usually come with higher interest rates.

What is a personal loan comparison rate?

In our personal loan table at the top of this page, the comparison rate sits to the right of the interest rate and is a quick way of comparing the cost of the personal loan once both the interest rate and fees are combined. The comparison rate is often coined as showing the 'true' cost of a loan.

Where can you find great personal loan rates? 

There’s no easy answer to this question, as it will depend on your financial circumstance and what you’re looking for. So to help you make a decision, we’ve jotted some pros and cons for different types of lenders.

Big banks:

This includes the big four banks, Westpac, ANZ, NAB and CommBank, plus other major lenders like St George, Bankwest, HSBC and ING.

  • Pros: One of the big benefits of going with a major bank is that you’ll be able to visit a local branch and speak to someone in person if you ever have an issue, which is not the case with some smaller or online lenders.
  • Cons: On the other hand, big banks generally charge higher fees and may not offer the most competitive rate on the market.

Credit Unions:

An alternative to the big banks are smaller credit unions. These are not for profit organisations that are funded by their members. 

  • Pros: Rather than passing profits back to shareholders, credit unions return their profits to their members in the form of competitive rates and fees. 
  • Cons: However, to have access to these competitive rates, you'll need to become a member and sometimes need to pay a small fee.

Peer-to-peer (P2P):

A newer type of lender shaking up the market is peer-to-peer (P2P) lenders. P2P operates on a different platform to traditional banking in which it connects investors with potential borrowers in an online marketplace. 

  • Pros: For a borrower, this means competitive rates and fees while not having to deal with a financial institution. 
  • Cons: But you should know that P2P lenders set their rates on tier-based systems, meaning if you’ve got a poor credit history, you could score a higher interest rate. On the flip side, if you've got a clean credit history, you’re likely to get a better rate.

How fast can I access the money with a personal loan?

One misconception about personal loans is that applications can take a while to process. In reality, finding a fast personal loan is possible, and some lenders can have the funds in your bank account on the same day or within 2 business days.

How do I make loan repayments? 

While many lenders will offer different repayment schedules, personal loan repayments can typically be made on either a weekly, fortnightly or monthly basis. One easy way to make your repayments is to set up a direct debit from your bank account. This will also help ensure you won't ever miss a repayment or be charged a late payment fee.

But if for any reason you can't make a repayment, you’ll need to contact your lender ASAP to discuss an alternative arrangement.

Personal loans vs credit cards, which is better?

If you are looking at borrowing a small amount, say under $5,000 and are tossing up between plastic or a loan, here are some things to consider:

Personal Loans:

  • Pros: Taking out a personal loan is a good option if you need a set amount of money upfront and plan to pay it off in an agreed timeframe. Plus, the regular monthly repayment amount of a fixed interest rate personal loan makes it easy to budget.
  • Cons: If you want to pay off your fixed rate loan early, you may incur a break cost fee.

Credit Cards:

  • Pros: An interest free credit card can be a good option for smaller expenses like a holiday or outdoor reno, as you have the flexibility to pay as you go.
  • Cons: 0% intro credit cards often revert to a much higher rate once the "honeymoon" period has ended. So if you can't pay off the full balance before the interest free period comes to an end, you could feel the bite of high rates and end up paying more than with a low rate personal loan.

Purchases made with a personal loan, are there restrictions?

Personal loans are designed to help fund bigger purchases that make more sense to pay off over time rather than having to wait until you have the money saved to pay for it upfront. This is why personal loans could be a good finance option for Aussies who are buying a new car, doing some home renovations, planning a wedding or other big one-off expenses.

Lenders generally don't have many restrictions on what you can use a personal loan for, though you'll usually be asked about the purpose of the loan when you apply.

  • The key thing for a lender is making sure that you can meet repayments over the loan period. But a personal loan shouldn't be seen as a way to supplement your salary to pay for everyday expenses. You'll want something to show for the money you've borrowed.

Car loans: For some purchases, there are lenders that will actually give you a better interest rate than a regular personal loan. For instance, if you are planning on buying a new car, you'll find that many lenders will have sharper rates for new car purchases when you secure the car against the loan.

Green loans: Another loan purpose that's getting more popular with lenders in Australia is eco-home improvements such as rainwater tanks, solar panels, insulation. Lenders view borrowing in these areas as smart investments and reward customers with lower interest rates.

Check out the Mozo Experts Choice Personal Awards page to see which Aussie lenders have received our expert's tick of approval.

Can I get a personal loan with bad credit?

While you still might be able to get a personal loan with bad credit, it’s not always the best idea as you’ll often be charged super high rates and fees. Thanks to the rollout of comprehensive credit reporting (CCR), many lenders have already begun assessing a borrower’s credibility based on their credit history.

In this case, it could be worth repairing your credit history first before applying for a loan.

Can I get a personal loan if I'm a student?

Yes, some providers offer personal loans to students, but you’ll find there is a slight difference in terms of eligibility. With a student personal loan, there’s a little more flexibility with the loan application since students generally have lower incomes and little to no assets, compared to a borrower working full time and no longer studying.

But although approval for student personal loans does come with some breathing room, lenders tend to be a little stricter in terms of repayments and may only offer smaller loan amounts to help make sure you can comfortably pay back your debts.

Are pensioners eligible for personal loans? 

Yes, pensioners can take out a personal loan, but it can be tricky to get approved. If you're a pensioner looking to take out a personal loan, you’ll find that there are limited options. This is because it’s harder to prove to a lender that you can make your repayments if you no longer have a regular income.

However, if you’ve got some extra cash stashed away in an account that can be put towards your repayments, you might be in a better position to negotiate with a lender and have better chances of success.

Comprehensive credit reporting and loan approval

Australia is in the process of moving towards a comprehensive reporting system that enables lenders and other businesses to see your whole credit history when making a judgement on whether to lend you money. In the past, banks were only ever interested if you had missed a repayment or defaulted on a loan.

Now they are able to get a sense of your whole financial picture, such as when you make your bill repayments, whether you pay the whole bill or only part of it, how much of your credit limit you have available etc. The positive to this is that it rewards people who can demonstrate good savings and financial behaviour. Lenders can see that you will be able to pay back any money borrowed in the timeframe that you said you would.

So now, when it comes time to think about getting a personal loan, you really need to be much more prepared in the lead up by making sure your bills are kept up to date, you're demonstrating good savings habits, and comfortably meeting other financial commitments.

Before you apply for a loan, it's a good idea to get a copy of your credit report so that you can check it for any errors or know the areas that you might want to improve before you ask the bank for a loan.

There's no way of guaranteeing that you'll be approved for any loan. All you can do is make sure that you've got the highest chance possible - this means:

  • Crunching the numbers upfront: There's no point shopping around car yards looking at $40,000 cars if you can only afford to borrow $20,000. You need to know how much you can realistically afford to borrow and choose a time frame that will allow you to pay the loan back comfortably without causing financial stress. The good news is that many lenders will allow you to make extra repayments or even pay the loan out early with no penalty, so you can always put more towards the loan if you choose.
  • Demonstrate good savings habits: Lenders want to be confident that you can set goals and make payments towards these. Start by putting away money each week into a savings account, equivalent to what your repayment amount would be, to demonstrate to yourself (and the bank) that you'll be ok with the responsibility of repaying the loan.
  • Keep on top of your bills: You know that a potential lender will be looking at your credit score, so don't give them a reason to knock you back. Keep your credit file in the best health possible by keeping on top of bills, rent and expenses. Even if you've not done this in the past, this doesn't mean that you'll automatically be rejected. If lenders can see that you're making positive changes to the way you manage your finances, they could be more likely to approve you now that comprehensive credit reporting is here than in the past.

Information needed for a personal loan application:

With most lenders now offering online loan applications, applying can be pretty straightforward. In some instances, (once approved) you can even get the funds directly deposited into your account within a few days of the loan application.

To make your personal loan application go as smoothly as possible, it's a good idea to have some of the essential information handy and that you'll meet any eligibility requirements.

If you're applying for a loan with a provider that you don't already have any personal history with, it's likely that you'll need to supply them with personal information and identification details. Examples of this kind of information are:

  • A drivers licence number
  • Passport details
  • Utility bills that are in your name & show your current address

Other information you are likely to need includes:

  • Proof of income (recent payslips or tax return)
  • List of other assets and liabilities
  • Proof of employment
  • Loan amount and loan term requested

What happens if my personal loan application gets rejected?

If you come to find that you've been rejected for a personal loan, it's best not to immediately apply for another. Each time you’re rejected for a loan, it goes on your credit history, potentially making it even harder to get approved next time.

The first thing you’ll need to do is assess why you’ve been rejected. Some of the more common reasons for being rejected include having a:

  • bad credit history
  • low-income
  • unstable employment 
  • having too many loans already.

These are all things that might impact your ability to repay your loan in the future.

Your next step should be to make adjustments to your application to ensure that you aren’t rejected again. This could mean cleaning up your credit history, reassessing your budget and borrowing capacity to make sure you can afford the loan or trying to add a little more to your savings stash.

Personal loan traps to avoid:

The thing to remember about any kind of personal credit is that you'll eventually have to pay the money back. Here are some tips to help you avoid some of the biggest borrowing traps:

  • Borrowing more than you need: Like the idea of a round-the-world first-class trip? So do we, but just because the bank says you can borrow $50,000, doesn't mean you should do it. Once that money is in your bank account, it can be hard to stop the spending, so be really strict on yourself at the start of the process and only borrow the minimum amount you'll need and try to pay for any extra with savings.
  • Spending money on other things: Say you've budgeted $10,000 for a new deck and BBQ area, got your loan sorted out and the funds in your bank account. The quotes come in, and it's $2,000 cheaper than you expected. It can be pretty tempting to then use that money saved on other purchases, but rather than falling into this trap, put the money straight back into the loan by making a lump sum repayment. If the loan you choose has a redraw facility if you need to use this money later on down the track, you can but don't pay interest on money you don't need.
  • Being late with repayments: We all lead busy lives, and it can be hard to keep track of repayment dates which is why you shouldn't. Online banking, direct debit and payment notifications mean that you don't have to keep track anymore. You can either choose to have the bank take it out of your account directly or alert you when your payment is due. Not only will you avoid paying a late fee this way, but you'll also keep your credit file squeaky clean.
  • Not fully understanding joint loan applicant responsibilities: A joint personal loan can be a good way to fund purchases that you may not be able to get on your own, but with a combined income, you can. But if you do take out a joint loan, it's important to realise that you'll have the responsibility of repaying the loan even if the joint applicant can't. Be sure that you read the terms and conditions on any joint loan before signing on the dotted line.
  • Paying more interest than you need to: One of the best things about the Australian personal loan space is that there are many lenders to choose from. And with all this choice, means competition for your business. Don't get stuck paying high interest rates when you don't need to. The lower the interest rate, the lower your repayments, so do yourself a favour and shop around. 

Personal Loan Reviews

ANZ Unsecured Personal Loan review
Overall 1/10
Very poor bank

Only wanted a few dollars for a week to pay bond changing house told me I would have to borrow 5,000 so went with that all the drama never had this before never do it again and they didn’t give me any respect been with them for years. I never even received an answer if I was accepted very very poor.

Read full review

Only wanted a few dollars for a week to pay bond changing house told me I would have to borrow 5,000 so went with that all the drama never had this before never do it again and they didn’t give me any respect been with them for years. I never even received an answer if I was accepted very very poor.

Price
1/10
Features
1/10
Customer service
6/10
Convenience
5/10
Trust
1/10
Less
Des, Tasmania, reviewed 25 days ago
Suncorp Personal Loan review
Overall 1/10
Avoid this bank.

Stay away from this bank. Worst customer service for existing customers. Go out of their way to get your business but then make everything very difficult as a customer. Not enough branches across Australia and those that are available are inefficient and don't have enough authority to actually help. Online service is almost non existent and had to sit on hold for nearly an hour on the phone, only for the guy to tell me that the department I need to talk to have gone home for the day!! You need to wait months for things to happen and it will all go through the post. Have reported to the ombudsman. Avoid this bank, there are better options available with far better customer service.

Read full review

Stay away from this bank. Worst customer service for existing customers. Go out of their way to get your business but then make everything very difficult as a customer. Not enough branches across Australia and those that are available are inefficient and don't have enough authority to actually help. Online service is almost non existent and had to sit on hold for nearly an hour on the phone, only for the guy to tell me that the department I need to talk to have gone home for the day!! You need to wait months for things to happen and it will all go through the post. Have reported to the ombudsman. Avoid this bank, there are better options available with far better customer service.

Price
4/10
Features
5/10
Customer service
1/10
Convenience
1/10
Trust
2/10
Less
Ashley, Western Australia, reviewed about 2 months ago
Commonwealth Bank Unsecured Personal Loan review
Overall 1/10
Baaaaaad

N/A

Price
1/10
Features
1/10
Customer service
1/10
Convenience
1/10
Trust
1/10
Less
John, New South Wales, reviewed about 2 months ago

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