When you find yourself in need of extra cash and what’s under the couch won’t be enough, it might be time for a personal loan. At Loantec, we believe you should be aware of everything you need to know about getting a personal loan before you sign the paperwork. From a burst pipe to a first-class trip to Europe, Loantec is here to help you secure the funds you need fast.
Want to know how much you might be able to borrow? Our simple pre-qualification tool is an easy way to see how much you may be able to get. When you speak with our experienced Finance Technicians, we’ll take the time to talk you through your options and find the finance option that’s best for you.
What is a Personal Loan?
A personal loan is a set amount of money a financial institution will lend you, that will typically go towards a specific purpose. When you apply for a personal loan, your lender will assess your financial situation and determine if you’re able to repay the loan. Each lender uses a different method when processing applications, which results in a variety of interest rates and repayment time frames.
At Loantec, we analyse all your information and find the personal loan solution that best fits your circumstances. Our team will provide you with all your factual options, so you can make an informed decision. Contact our Finance Technicians to get your personal loan today!
Different Types of Personal Loans
There are a variety of options when it comes to selecting the right personal loan. Your financial situation and individual needs dictate what type of loan is right for you. Below you’ll find a breakdown of some of the most common personal loans you might come across.
Unsecured Personal Loan
Generally, this is the type of loan most people think of when it comes to personal loans. Unsecured loans don’t require any assets to get funds and are a great choice if you don’t want to put anything up as security. As with most loans, you’ll need to provide proof of income, demonstrating you can make the payments. The primary drawback with unsecured personal loans is that they typically have higher interest rates and penalty fees for late payment. And if you default on the loan, the lender may take legal actions against you to recover the debt.
Secured Personal Loan
With a secured personal loan, you put up an asset as security against the loan. Otherwise known as collateral, you can use any asset that lenders find valuable, such as a car, boat, or house. Using security gives the lender confidence that they’ll be able to regain the value of your loan if you don’t make your payments, because they can repossess what you’ve put up as security. You’ll often find lenders are more willing to accept this type of financing and you can get a lower interest rate as compared to an unsecured loan. The downside is if you don’t make the payments to the lender, they’ll sell your security to recoup their losses.
Fixed vs Variable Interest Rates on Personal Loans
There are a couple of choices when it comes to paying interest on a personal loan. It can either be a fixed or variable interest rate (or a mixture of both). So, you’ll want to know all the facts before you make this decision.
Fixed-Rate Personal Loan
When you get a fixed-rate personal loan, the interest rate will stay the same for a set period of time. The advantage of choosing this option is the stability of knowing how much your repayments are going to be. Fixed-rate terms are usually not for the entire length of the loan, and you’ll probably need to renegotiate the interest rate of the loan once your fixed term is over. These are often less flexible than variable loans and trying to repay the loan earlier can incur additional fees.
Variable Rate Personal Loan
Choosing a variable rate personal loan means that the interest rate changes throughout the life of the loan. Interest rates are usually adjusted whenever the Royal Bank of Australia (RBA) makes a change, however, it’s ultimately up to your lender as to whether they pass on these interest changes. A benefit of variable loans is that many lenders allow you to pay off what you owe early, without additional charges. This will decrease the total you’ll need to pay back.
Personal Loans Fees & Charges
Many traditional banks and lenders will have unexpected fees and charges hidden in their personal loan contracts. At Loantec, we believe you need to be 100% aware of any charges you’ll incur when applying or throughout paying off your loan, which is why our Finance Technicians will walk you through every aspect of your finance with us before you sign anything. Below are some of the most common fees or charges you’ll come across when getting a personal loan.
Application/Establishment Fees
Also known as an upfront fee, this charge is the cost of applying for the loan. This fee is often applied immediately after the loan is approved.
Ongoing Annual/Monthly Fees
A lender may charge an ongoing fee to cover the administration costs involved in managing the loan. Different lenders have various policies on whether these fees are charged.
Documentation Fees
A documentation fee is an expense for the cost of preparing and assessing your documents for the application process. Generally, not many lenders will charge this fee.
Early Repayment Fees
Early repayment fees are applied when you try to pay for the remainder of what you owe before the original end date. This comes with the advantage of paying less interest, resulting in lower total payments over the life of the loan. However, lenders make more profit the longer you’re paying interest and this charge incentivises you against ending your repayments faster.
Missed Repayment Fees
Sometimes referred to as a dishonour fee, a lender may charge this every time you miss a repayment. This is a common charge from most lenders.
At Loantec, we pride ourselves on ensuring our clients understand all the details and costs associated with their personal loan. When you get finance with us, we take the time to discuss the details of your loans thoroughly, so you understand exactly what you can and can’t do.
Applying for Personal Loan
Before you apply for a personal loan in Australia, there are some eligibility criteria that usually need to be met. These may include:
- Being 18 years or older
- Be an Australian citizen or a permanent resident
- Having a regular income
- Demonstrating you’re financially responsible
You’ll also need to provide information and documentation to verify your eligibility for the loan:
- Identification – A driver’s licence or passport will provide evidence of who you are.
- Personal loan details – Give details on the reason you’re in need of finances & the type of loan you’re looking for.
- Financial information – Present information about your assets & expenses, including cars, rent, debts, & children.
- Employment information – Provide proof of your current employment situation & how much you earn. This can be done through payslips or tax returns.
Loantec has helped thousands of clients through the process of getting a personal loan. Our Finance Technicians are dedicated to ensuring you get the best rate possible. Fill in our simple pre-qualification form to learn how much you might be able to borrow, and give our experienced team a call to finance your next holiday or renovation today!
*All information in this article is general in nature and does not constitute financial advice. Loantec and related companies always recommend seeking professional financial, legal and tax advice before making any financial decision.
Happy Client
“Would like to say a big thank you to Tammi and the team at Loantec they helped us consolidate our outstanding debt to put us in a better position for the future.
100% recommend this company they made the whole processes very easy and uncomplicated.
THANK YOU!”