6 Types of Personal Loans Available in Australia

9 min read

Conventional bank loans

Conventional bank loans are the traditional type of personal loan that is available to borrowers. A conventional loan requires a down payment of 20% of the total amount borrowed, along with a monthly repayment consisting of principal, interest, fees, and any additional costs associated with managing the debt. Borrowing money this way comes with some risks, however, since it’s hard to predict what kind of rates you’ll get when applying for these types of loans.

Home Loan

Home loans are available to Australian borrowers who want to take out a mortgage to buy their own home. This type of loan provides a low-interest rate for the borrower compared to other types of loans. You don’t have to put up any collateral (like your house) to receive the lowest possible interest rate, though you may need to pay a higher closing cost than if you were using a conventional loan. If you already own your home, then a home loan is perfect for you.

A Small Business Loan

If you’re thinking about starting a small business, then a small business loan might be right for you. Unlike a home loan, where you buy a piece of property, the idea behind a small business loan is to finance capital investment. To qualify for a small business loan, you’ll need to show how much income your business makes and prove that it is capable of paying back a loan over time. In exchange for providing the cash upfront, the lender expects you to make a series of repayments each month.

Equity Line Of Credit

An equity line of credit is similar to a credit card, except instead of borrowing money, you borrow against the value of your assets. As long as those assets are valued at more than the amount you owe, the difference between your asset value and the outstanding balance on the line of credit becomes your equity. Most people use equity lines of credit when they need to borrow money without having to put up any collateral. You can draw upon your line of credit whenever you want, as long as you stay under your limit. When you do run up against the limits, you’ll need to start making payments again.

Lending Tree Finance

LendingTree Finance is a type of lending platform that connects lenders and businesses looking to borrow money. They provide a marketplace for businesses to list their products and services, while enabling them to find potential customers, investors, and partners. Businesses can set a price and terms for their product or service, and LendingTree matches them with interested buyers. This results in an agreement whereby both parties agree on the sale price of goods and services sold. Once the deal is finalized, both parties issue invoices to each other based on the agreed prices.

6.. Simple Loans

EasyLoans is an online platform that enables Australians to access short-term loans with flexible repayment options. They offer personal loans, car loans, and student loans, among others. The application process involves filling out a simple questionnaire, uploading copies of documents, and answering security questions. The loan approval process takes only a few minutes, after which the funds will be deposited directly into your account. All you need to do is pay off the loan once a month until it’s paid in full.

6 Types of Personal Loans Available in Australia

Personal Loan Secured Against Gold

If you want a loan secured against gold, Australian banks offer personal loans backed by physical gold. You can borrow money against any piece of gold that you own at no cost. Once you have paid off the loan, you can sell the gold and make some quick cash. However, the bank may charge you a small fee for providing them with security if they decide to hold onto the gold while you try to repay the loan. If you already own gold, then this could be a great option for you. Your loan provider will need to know how much gold you own and whether it’s in-house or stored elsewhere.

Personal Loan Secured against Property

Personal loans secured against property are secured loans where borrowers provide collateral to ensure that their loan repayment is guaranteed. This security takes the form of real estate and/or movable assets. These loans are commonly known as mortgage loans. Borrowers take out these loans to finance home improvements, renovations, or even just pay off existing debts. When taking out a loan secured against property, you will need to pay back the full amount borrowed plus interest over time. If you fail to repay your loan, the lender will retain ownership of the asset, which means losing access to the funds.

Personal Loan Secured by Vehicle

Personal loans secured by vehicles are secured loans that are secured against specific vehicles. Before you agree to lend someone money, you should check their credit score and verify that they have insurance (and sufficient insurance) before you agree to give them a loan secured by their car. A high credit score indicates that they’re likely to be able to repay the money, whereas low scores might mean that they won’t be able to pay back what they owe.

Home Improvement Loans

Home improvement loans are personal loans that are designed to help people improve their homes. Such loans use the value of the house as security for the loan, meaning that lenders will require a copy of the deed to confirm that the borrower owns the house outright. The loan provider will assess the value of the property based on its current condition, whether the value exceeds the outstanding balance, and any improvements made since purchasing the property. There is often a minimum term requirement, which stipulates how long borrowers need to repay the loan. Repayment terms may vary depending on how old the loan is and how much credit history the applicant has.

Student Loan

Student loans are secured loans that are offered to students who wish to study at a university or college. Most student loans cover the entire course, including course fees, books, and accommodation costs. Students will often borrow between $10,000 and $15,000 per year. While many schools now allow students to borrow upfront to cover the tuition fees directly, others expect students to pay their fees and repay the loans via income after graduation.

Credit Card With No Security

Unsecured credit cards are unsecured loans that help individuals meet short-term financial goals, although customers are not expected to repay the entire debt at once. Rather, they are given a credit limit and charged a regular interest rate for each period that they spend money. Customers are allowed to pay off the entire amount owed in installments or even in monthly payments. Customers may apply online, by phone, or in person at local branches of their credit card provider.

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6 Types of Personal Loans Available in Australia

Home Loan

A home loan is a secured personal loan where a portion of your property serves as security until the loan is paid back. This loan type is commonly known as a mortgage, although it should not be confused with a traditional real estate purchase. If you have a house worth $400k (and no equity), then you would need a 5% deposit ($20k) on top of your $380k mortgage before you could make any payments towards buying your home.

Auto Loan

An auto loan is a personal loan designed specifically for car purchases. Many people opt for this loan over a home loan because they are able to get a larger amount of money at lower interest rates than what they would receive for a mortgage. Unlike home loans, auto loans do not require down payments or collateral (typically). However, if you are planning on purchasing a vehicle for resale purposes, then an auto loan may not be suitable for you. A great advantage of using this loan option is that many banks offer 0% interest on selected car models.

A Personal Equity Line of Credit

A personal equity line of credit (PELC) is similar to a credit card, except instead of receiving a fixed interest rate, you will get a variable interest rate based on market conditions. This means that you pay interest on the entire sum on your balance each month until you pay off your entire balance. It is typical for PELCs to have terms of 36–48 months. You can use this loan for any purpose that you would use a credit card for—paying off bills, purchasing items, etc.

Business Loan

Business loans are different from regular personal loans because they are meant for business owners who are looking to expand their operations. Typically, these loans target companies that have been around for at least two years and have strong financial records. Banks often charge higher interest rates compared to personal loans, and some lenders even offer competitive rates depending on how much capital you raise via debt financing.

A Small Business Loan

Small businesses are those that operate with fewer than 50 employees and less than $10 million in annual revenue. This type of company requires additional funds to grow and invest in the future. Banks understand that small businesses are riskier than big conglomerates, so they give them smaller amounts of cash to help mitigate risks. Small businesses are typically given between $25-$50k per year and must have solid financial records.

Private Lending

Private lending refers to loans offered by individuals rather than institutions. These loans are generally for specific uses, like remodeling projects, student funding, and more. Most private loans will only lend a certain amount of money without requiring collateral.

6 Types of Personal Loans Available in Australia

Home loans

A home loan is a type of debt that can only be repaid out of the house owner’s future rental income. If you buy a home, you can borrow money against your property. You have probably heard about people buying their first homes and paying them off throughout their lives. However, if you take out a mortgage on your existing home, you’re borrowing against its value. If your home drops in value over time, you may end up repaying more than what you originally borrowed.

Personal loans

Personal loans are short-term debts commonly used for small purchases or emergencies. They can be taken out at any bank branch, and they aren’t regulated by the government. People use personal loans to pay for things like credit cards, holidays, car repairs, computers, mobile phones, weddings, renovations, and medical bills.

Lines of credit loans

Lines of credit loans (also called revolving lines of credit) are similar to credit cards—you give your lender a certain amount of money, and then start making interest payments straight away. There is no set limit on how much you can borrow, but you do need to repay some of the money before you get any more. If you don’t, you’ll end up paying interest on top of the original amount. If you carry a balance owed on your account for longer than a few months, you could find yourself having difficulty getting a good rate.

Personal overdraft

An overdraft is similar to taking out a loan, except that you never actually make an interest payment. Your cash goes into an account where you can withdraw money whenever you want. When using an overdraft, you should always ensure that you plan ahead and cover your expenses. Also, check that you’re not charged fees for using the facility.

Buy here, pay later.

Buy here, pay later accounts allow you to purchase items now and pay for them later without having to pay upfront. This is great for people who might not have enough money for a down payment and would rather put money toward their purchases over time. Items purchased via these types of accounts vary depending on the provider, but can include electronics, furniture, clothing, and household goods. If you don’t manage your account well, you could find yourself paying thousands of dollars in fees along the way. Make sure you read and understand the terms and conditions so you know exactly what you’re agreeing to once you enter into a contract.

Personal Loan Comparison

The best way to compare different loan providers is to visit their websites. Once there, search for your loan type and compare rates and offers. You can also look through reviews and ratings left by other customers. Try finding information online from the Better Business Bureau and Consumer Affairs Departments in your state.

6 Types of Personal Loans Available in Australia

In this video we look at the 6 types of personal loans available to Australian consumers. Do you know which type of loan is right for you? Find out here!

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Please watch: “How to get out of debt & save money fast | Sandra Larkins (Part 1)”

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What is the monthly car loan payment?

“The interest rate on any car loan varies from financial institution to financial institution. However, generally speaking, it is around 2% for budget cars; 4–5 % if it’s middle class; 5–8 % for luxury cars; and around 10 % for luxury vehicles.”

Repayment period for vehicle loans vary between 9 months and 4 years.

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