Personal loans a loan just for you in Perth.
A personal loan can help you pay for something special like a holiday or home renovations. Make sure you can afford to borrow, and then shop around to get the best deal on interest rates, fees and charges.
How personal loans work, check the interest rate, fees and chargesFind out the term of the loanRead your credit contractCheck your credit provider is licensedStay out of debtHow personal loans work
If you get a personal loan, you must repay the money you borrow within a specific time, usually 1 to 5 years. You also pay interest on the amount you borrow, plus fees and charges.
What you need to give the credit providerAll credit providers are required by law to lend you money responsibly. This means they must not lend you money if they think the credit is unsuitable for you.
The credit provider may look at your credit report and ask for:
PayslipsBank account statementsCopies of other credit contracts or billsThis is so they can verify your ability to meet the loan repayments without financial hardship.
Secured and unsecured loansSecured loans usually offer lower interest rates than unsecured loans, but you need to put up an asset, like your car or home, as ‘security" to get the loan. If you don"t repay the loan, the credit provider may (in some circumstances) sell your asset to get its money back without first going to court.
With unsecured loans you don"t have to put up an asset as security, but the interest rate is usually higher. To get an unsecured loan, you must convince the credit provider that you can repay the loan. If you don"t repay the loan, the credit provider may take you to court to get its money back.
Peer to peer lendingPeer to peer lending, also known as marketplace lending, is an alternative to traditional lenders such as banks, building societies or credit unions. People who have money to invest are matched with people who are looking for a loan, through an online platform.
Marketplace lenders offer secured and unsecured personal loans and you will need to provide your personal and financial details, just as you would with a more traditional lender. Find out more about peer to peer lending.
Check the interest rate, fees and charges
Personal loans usually have lower interest rates than credit cards – but they are still high compared to other types of credit. Fees can also be higher. To make sure you"re getting a fair deal, see getting the best credit deal.
Annual percentage rateThe annual percentage rate (APR) is the interest rate your credit provider will charge you to borrow money. It is also known as the ‘listed" or ‘published" rate. Multiply the APR by the term of the loan to find out how much interest you will have to pay over the life of the loan.
Work out your interest payments.
personal loan calculator
Fees and chargesFrom 1 July 2013, fees charged on loans of $2,000 or less are capped (that is, limited to a maximum amount). For more information, see small amount loans.
From 1 July 2013, the fees and charges allowed on loans of more than $2,000 are also capped.
Smart tipA small variation in interest rate can add up to a lot over time, so always shop around. Find out what charges you will be up for if you can"t meet your repayments.
Fee limits on medium amount loans ($2001-$5000)For ‘medium amount" loans which are for amounts between $2,001 and $5,000 to be repaid between 16 days and 2 years, fees are limited to:
A one-off fee of $400A maximum annual interest rate of 48%, including all other fees and chargesFee limits on loans of more than $5000For all loans of more than $5,000 or with terms longer than 2 years, the fees and charges must not be more than 48% annually (including any establishment or other fixed fees).
These fee caps do not apply to loans offered by Authorised Deposit-taking Institutions (ADIs) such as banks, building societies or credit unions.
Find out the term of the loan
A personal loan could sound good because it may offer a lower interest rate than other types of credit and repayments are spread over a long time. But keep in mind that the longer the loan term, the more you will pay in interest.
When comparing loans, make sure the term is the same for each loan. This will give you a true picture of the difference in interest rates.
Read your credit contract
When you take out a personal loan, you will be asked to sign a credit contract. The contract will detail:
The amount you borrowedThe interest rate, fees and chargesThe amount of repayments and when they are dueThe term of the loanAlways check the terms and conditions of your contract before you sign.
Check your credit provider is licensed
All credit providers and credit assistance providers (such as brokers) must be licensed with ASIC or be an authorised representative of someone who is licensed.
Search ASIC Connect"s Professional Registers to check your credit provider or credit assistance provider is licensed or you can phone ASIC"s Infoline on 1300 300 630.
For more information see consumer credit regulation.
Warning about loan scamsBe suspicious if you are contacted out of the blue by a company offering loans with low interest rates, as they could be operating a loan scam. Also be cautious if you come across a website offering loan applications online as you will need to check they are legitmate before apply for a loan. See our tips on how to pick a loan scam.
Stay out of debt
Try to pay off the loan quickly to reduce the amount of interest you will pay. Contact your credit provider early if you have trouble making repayments or see trouble with debt for help and advice. Also see borrowing basics for more tips on managing credit and loans.
If you had the wind knocked out of your credit scores due to financial problems, or because you’re struggling to build credit for the first time, it can be difficult to get a loan. Additionally, with recent changes to credit reports, it’s important that you understand what factors affect your credit and how to build it. You might be surprised that you have more options than you think. I’ll give you 5 ways to find a good loan even with bad credit.
How to Get a Loan with Bad Credit
Having no credit or poor credit is a major stumbling block to getting a loan because you’re viewed as a high risk customer who might default and leave the lender holding a bag of worms. It’s just a fact that until you raise your credit score, you won’t fit the standard lending guidelines that traditional, big banks have to follow.
If you’ve been turned down for a loan or don’t want to get stuck paying high, subprime interest rates, here are 5 alternatives to consider:
Option #1: Use a Home Equity Line of Credit
If you have enough equity in your property, you could get a low-interest, tax-deductible line of credit to spend any way you like.
Of course tapping your home equity puts your property in jeopardy if you can’t repay the debt. But if you have reliable income and are disciplined about paying down an equity line, it’s an inexpensive option, regardless of your credit score.
Compare loans from several institutions so you know you’re getting the lowest interest rate possible before you sign the final paperwork.Option #2: Apply to Credit Unions
Credit unions are similar to banks but are owned by their members, who typically have something in common—like working in the same industry or living in the same geographic area. Credit unions are nonprofit organizations that pass along earnings to members in the form of lower fees and higher customer service.
Visit findacreditunion.com to locate a credit union near you and give them a call to discuss getting a personal loan. Compare loans from several institutions so you know you’re getting the lowest interest rate possible before you sign the final paperwork.
See Also: 5 FAQs About Your Credit
Option #3: Get a Peer to Peer Loan
Peer to peer or P2P lending has been around since 2005. It’s an online platform that allows you to borrow directly from an individual instead of from an institution. Peer to peer lending is growing in popularity because it’s a streamlined process that’s a win-win for borrowers who pay low interest rates and investors who earn high interest rates. Right now, you can borrow for as little as 6% and earn an average return in the double digits—that’s pretty impressive.
Borrowers post a loan listing that includes the amount they want and why they want it. Investors review loan listings and choose the ones that meet their criteria. Peer to peer lenders screen all applicants and check your credit, which becomes part of your loan listing. So while your credit score is still a factor, an individual investor may be more empathetic to your situation than a traditional bank.
Option #4: Take a Loan from Family or Friends
If an online peer won’t lend to you, perhaps you have family or friends who will. Treat a loan from someone you know just like a serious business transaction that’s clearly documented and legally recorded.
To avoid complications later on, create a written agreement that includes the interest rate, payment terms, any collateral you put up for the loan, and what happens if you fail to repay the debt. You can get promissory notes from sites like Rocket Lawyer or LegalZoom.
If you’re borrowing money to buy a home, the loan must be properly secured in order to take advantage of the mortgage interest deduction. To properly register and manage a home loan with a relative, use a service like nationalfamilymortgage.com.
The bottom line is that a family loan must benefit everyone involved and should really be a last resort. You don’t want to risk letting a close relationship go sour over a bad debt or a misunderstanding about money.
See Also: Best Ways to Monitor, Repair and Build Credit
Option #5: Appeal to a Co-Signer
If you don’t have a friend or family member who’s willing to give you loan, perhaps one with good credit would be willing to co-sign a loan with you. Someone who knows your situation and trusts your ability to repay the debt would probably be willing to take a chance on you.
Just remember that if you don’t repay the debt, the creditor will look to your co-signer for full payment. Additionally, all the payment history will be recorded on both of your credit reports, which could be devastating for your co-signer if you don’t hold up your end of the bargain and make late payments or default.
If none of these 5 lending options works for you, do your best to raise your credit score so you can qualify for a traditional loan. A good place to start is to check your credit report for free at annualcreditreport.com and correct any errors that might be hurting your credit scores. You can improve poor credit by paying bills on time and not overextending yourself on loans and credit cards.
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