Home > Personal Loans > Busting the major personal loan myths
Author
Savvy Editorial TeamFact checked
It makes sense to go to your bank to get a personal loan, right? Your savings are kept there; even a credit card. However, you don’t have to go to your bank for a personal loan. In some cases, your bank may offer the least favourable rates and terms on the market. “Using a loan calculator or comparing loans with a broker can save you a lot of money,” says personal loan expert and Savvy CEO Bill Tsouvalas. “You can use your bank as a baseline but don’t automatically think you’ll get the best deal.”
When people think of personal loans, they often confuse them with payday loans – payday loans are short-term loans that have effective interest rates of 50%-100% (usually collected as fees.) Personal loan rates are lower than credit card interest rates (per annum) and can be cheaper than alternatives like using home loan equity. Personal loan rates over five years can range from 8%p.a. to 18%; though if you shop around, you’ll find something towards the lower end.
If you already have a credit card, putting a big purchase on your plastic seems like the path of least resistance. However, as we said earlier, a small personal loan may end up cheaper due to the fact your repayments are directly paying off the loan. Paying a credit card’s “minimum” will only increase your interest as time goes on. Credit card interest rates don’t usually start well into the double digits (11-12%p.a., if you’re lucky) while online cash loans have a set term and set repayments.
Applying for personal finance doesn’t put a black mark on your credit history as a matter of course. Making many applications and getting rejected does make lenders wary of your financial situation. If you are a responsible borrower and pay on time, your credit history will remain healthy.
Most personal loans are unsecured, meaning they do not require collateral in the same way a car loan or home loan does. This is especially helpful if you are young and have no assets. The only trade-off is unsecured loans have slightly higher interest rates compared to secured loans.
OurMoneyMarket Unsecured Personal Loan | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|||||||||||||||||||
Apply for an unsecured personal loan between $2001 to $75,000 for a variety of loan purposes. Get a personalised rate estimate in minutes without impact your credit score.More details |
Disclaimer: A comparison rate indicates the true cost of a loan. The comparison rate displayed for this advertiser is calculated based on a loan amount of $30,000 over 5 years and represents the effective rate on the loan. Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.