Guide for Personal loans in Australia

Personal loan, also known as the Consumer loan, is a type of unsecured loan, issued to the debtor for uncommercial purposes, such as personal/family or household needs, e.g. medical emergency or electronics purchase, etc. Repayment of personal loan is processed usually through fixed installments over a fixed time period.

Why to prefer personal loans?

Personal loans are preferred over cash advances due to the following reasons:

1. The primary advantage due to which people attract towards the personal loans is lower interest rates than cash advance.

2. Secondly, people are offered considerable slack of time to repay their loan easily. Thus people can easily payback their loan as well as save considerable amount of money in interest.

Types of Personal Loan:

There are many different types of personal loan. Some of which are discussed below so that you may be able to choose a type which suits you the best.

Secured Personal Loan:

In this type of loan, the authority from which you are granted the loan, has a right to possess some of your assets if you are not able to repay your debt before deadline. For example, if you were granted loan to purchase a car and you could not pay back the loan, now the authority has right to possess your car so that it may sell it to get the money you were not able to pay. Such a loan can be acquired easily at lower interest rate because the lender has less risk as well as the security to get the money back.

Unsecured Personal Loan:

Unsecured loans, on contrary, are available without any guaranteed asset, as in secured loan. There’s a little risk for the lender as there’s no security for timely payback, that’s why unsecured loans are available at a little higher interest rates.

Variable Personal Loan:

Variable personal loan is called so, because in this type of loan, interest rate is not fixed, and can go up and down. If interest is decreased, debtor will pay less amount and if increased, on contrary, debtor will definitely repay more amount of money. In general, variable rates are not higher than fixed rate.

Fixed Personal Loan:

In fixed personal loan, interest rate is fixed, and borrower doesn’t have to worry about the increase in the interest rate. However, there’s a drawback of fixed loan, i.e. if interest rate is down, still your interest rate will not be affected as you have chosen fixed personal loan. So, you have to pay the fixed amount.

What to Keep in Mind before Taking a Personal Loan?

Here are some tips to remember before you plan to sign up for a personal loan.

1. Different types of personal loans are discussed above; each of them is best for different type of scenarios. Choose among them which one is the best for you.

2. Don’t blindly choose any service, there are a lot of authorities in Australia offering personal loans. Compare offers and packages and choose the one with lowest interest rates.

3. Have a look on people’s reviews about the services of different authorities; this will help you choose a better one.