A personal loan is a finance option where you obtain a fixed sum. Afterwards, you commit to repay the sum plus interest via a regular schedule over a specified duration. Typically, this loan type spans between 3 and 5 years.

With this loan type, you can borrow as much as $100 000 and as little as $1 000. You can then use it to make purchases such as a new car, holiday travel, and debt consolidation, among others. 

Learn more.

What You Can Use Your Personal Loan For 

You can use your personal loans for the following purchases 

  • New and Used Car
  • Holiday
  • Wedding 
  • Student Loan
  • Renovation
  • Shares
  • Medical Bills 
  • Other 

How Does Personal Loan Work?

If you are looking to get a personal loan, you will go through the following process.

1. Application

You will need to send in an application showing interest in a personal loan. Typically, you will need to provide proof of income, personal identification, and bank statements at this stage. 

Also, where you decide to obtain a secured loan, you will need to supply details of the asset you intend to use as security.

2. Assessment

At this point, your potential lender will examine your details and finances to ascertain if you qualify for the loan you intend to get.

3. Credit Check 

Next, your lender, where responsible, performs a credit check to verify if you are a responsible borrower. In turn, this may affect the interest rates that come with the loan arrangement. 

4. Contract 

After the stages above and if you qualify for the loan, your lender will approve your loan request. 

Next up, they will draw a personal loan agreement, which you will need to sign. Usually, this contract will contain all the terms of the loan agreement – loan term, duration, interest rate, type of loan, and the fees that come with it. 

5. Repayment 

Next up is the repayment of the loan obligation, as you agreed to in the contract. Usually, this is monthly. However, some lenders will allow you to select other repayment schedules, such as weekly or biweekly, to fit your budget. 

Available Loan Option

You can obtain a personal loan through two options:

Secured Loan

Under this category, you get the loan sum by using your assets as security. Usually, in this case, your interest obligation is lower due to the reduced risk that comes with secured loans.

Unsecured Loans

Under this category, you obtain the loan sum without using any asset as security. Usually, in this case, your interest obligation is higher due to the increased risk that comes with unsecured loans

Who Offers Personal Loans

If you are looking to obtain personal loans, the following lenders are relevant 

  • Banks
  • Building Societies
  • Credit Lenders
  • Peer-to-Peer Lenders
  • Non-bank Lenders

Popular Personal Loan Lenders

  • Symple Loans
  • Liberty Financial 
  • Plenti 
  • Wisr
  • Now Finance
  • Heritage Bank
  • ANZ
  • Alex 
  • Society One
  • Latitude Financial Services
  • Money Place
  • Citi Bank

Frequently Asked Questions

This is a loan type that is suitable for borrowers with a bad credit score. Usually, this loan type comes with higher interest rates and higher fees since the lender bears’ increased risks.

People with bad credit don’t just pay higher; there is also a limit to how much they can borrow. While each lender stipulates its maximum sum, you will find it extremely hard to get a loan beyond $50 000 with a bad credit personal loan. 

When you obtain an unsecured loan here, it means regardless of your bad credit rating; you didn’t attach any security to the loan arrangement.

When you opt for a variable personal loan, the interest rate may increase or reduce during the loan duration. On the other hand, a fixed personal loan retains the same interest rate throughout the loan. 

A fixed personal loan allows you to budget effectively over the long run thanks to its consistency. On the other hand, with a variable personal loan, you may enjoy reduced interest obligation.

Yes, there is a relationship between your credit score and the interest rate for your personal loan. Usually, a bad credit score means more risk to your lender as you have a default history. On the other hand, a good credit score indicates less risk as you have a history of prompt repayment. 

As such, you will need to pay higher when the risk is higher and pay lower when the risk is lower. 

Yes, you can obtain low doc personal loans as long as you are self-employed. In this case, you will need to provide less documentation when you apply. However, you might need to pay an increased interstate rate or supply additional security.