Personal Finance

All you need to know - Personal Loans 101

What is a personal loan? 💸

A personal loan is money borrowed from a bank or online lender that you pay back in equal monthly repayments. Typically, personal loan durations range between one to five years. Personal loans can be secured or ‘unsecured’, meaning you don’t need to provide ‘collateral’, such as property, to secure the loan.

How do personal loans work? ⚙️

Personal loans are simple. First you apply online by providing your personal and financial information. The lender then determines whether they can provide you with the loan, they amount they provide, and what your interest rate will be. Once you have received approval for the loan, you will then receive the loan amount approved in one lump sum.

You will then pay back the borrowed money in equal installments (these can be monthly, fortnightly or weekly). The timeframe of these repayments is determined by the specific term of your loan.

The interest rate on your loan is determined by a number of factors. These include your credit score, income, personal expenses, assets (such as savings, property and shares) and liabilities (like credit cards and other loans).

When does getting a personal loan make sense?

You’ll benefit from a personal loan if you need extra money for something big – whether that’s a home improvement/renovation, to consolidate your credit card debt, a big trip overseas, a wedding or almost anything else.

The benefits of an unsecured loan

  • A lower interest rate compared to most credit cards
  • A fast and online application process
  • Certainty with respect to repayments
  • If unsecured, no risk to your personal assets or property
  • You can use the money for a very wide range of purposes

How much can I borrow with a personal loan?

Most lenders offer loans from $2,000 to $50,000.

Things to think about before applying 🤔

As with any financial decision, it’s important to consider the pros and cons of a personal loan. Make sure it’s within your budget and compare different loans before making a decision.

Like other financial commitments, there are a number factors to consider before applying for a personal loan:

  • Interest rate
  • Repayment frequency and amount
  • Loan term (usually 1-5 years)

Personal loans are useful tools, but use with caution

Personal loans can help bridge the gap between the money you have and the money you need. Personifi securely uses personal and financial information to match you to the most suitable personal loan for your situation, plus it’s a purely online, seamless experience.

Party time 🎉

The best thing about using Personifi is that when your loan settles, we provide you with instant cash back up to $500. Why? Because we believe in a world of trust, personalisation and reward in financial services.

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About Justin Joffe