Personal Loans in Australia: Types, Costs and Repayments

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Understanding Secured and Unsecured Personal Loans

• Secured personal loans: an asset is used as security for the loan. The asset may be repossessed if you default on repayments.
• Unsecured personal loans: no specific asset is pledged as security, but you remain responsible for repaying the debt. Interest rates, fees and lending criteria can differ from secured loans.
• Fixed interest rates: the rate stays the same for the fixed period, helping with repayment planning. Check restrictions or charges for extra repayments and early payout.
• Variable interest rates: the rate can change, which may affect repayments and total interest costs. Allow room in your budget for increases.
• Loan purposes and eligibility: permitted uses and lending criteria vary. Lenders may consider income, expenses, existing debts and credit history.

Comparing Personal Loan Costs and Features

Look beyond the advertised interest rate. Compare loans using the same borrowing amount and term so that differences in costs are easier to understand.

1. Review the interest rate, comparison rate and fees. A comparison rate combines interest with most fees and charges for a specified loan amount and term; it does not capture every cost or feature.
2. Consider both regular repayments and the total amount repayable. A longer term may lower each repayment but increase the total interest paid.
3. Check repayment frequency, extra repayment rules, early payout charges and any late-payment fees. Consider how these conditions fit your income and budget.

Planning Your Personal Loan Repayments

Start with the amount you need, then allow for everyday expenses, existing debts and unexpected costs. Consider whether using savings, reducing the expense or delaying a purchase could reduce the amount you need to borrow.

If you are considering debt consolidation, compare the total cost of the new loan with your existing debts, including any fees to close them. A lower repayment does not necessarily mean a lower overall cost, particularly if the new loan runs for longer.

A personal loan repayment calculator can help you explore how the amount borrowed, interest rate and loan term affect repayments. Its results are mathematical estimates based on the inputs and assumptions used, not loan offers, approval outcomes or personalised recommendations.

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Please note that some of our calculators may use assumptions that are not necessarily applicable to your current specific circumstances and we therefore cannot always guarantee their accuracy.

We recommend that you seek professional financial advice from a licensed professional before proceeding with a loan.

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