Make a personal loan work for you

Published on November 26th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Managing your personal loan correctly could go a long way in easing financial strains and freeing up cash flow during dry spells.

It is no secret that many cash strapped Australians are turning to personal loans as a means of alleviating some of their monetary pressures. According to the Australian Bureau of Statistics, approximately six million dollars has been allocated over recent months for personal financing alone, reflecting current trends in a tough economic climate.

The key, when it comes to taking out personal loans, is to be smart about how you approach things and to make it work for you.

Back to basics:

Before taking out a personal loan it is important to establish whether you really need it. Are you taking out a loan to pay for something you cannot afford such as a lavish holiday? Or do you require a loan for something more substantial such as furthering your education, putting down a deposit on a car or investing in home improvements?

Once you have established this, it is important to take a realistic look at figures.

Can you afford the repayments of the loan along with your current expenses? Will you have money available once your payment are made or will you be scraping by each month?

You may find that a personal loan could contribute to your financial woes rather than alleviate them, so make sure you are honest with yourself when analyzing figures.

Research what is right for you

When shopping for a personal loan, you may be bombarded with various offers, specials and promises from lenders. It is easy to get lost amid all this information, which is why it is important to find a loan suited to your specific financial requirements.

When considering your options, there are various aspects to keep in consideration:

Flexibility of loan terms: A good idea is to first use a loan calculator to work out what your monthly installments would be based upon a specific amount. From here you can work out when your installments should be paid and also if you have an option to change that amount in the future.

Interest rates: Yearly interest rates are established according to an annual percentage rate and, when taking out a personal loan, it is important to consider all costs involved, such as payment penalties and origination fees. Another aspect to consider is variable interest rates, which can rise and fall. This option is best avoided if you may battle to afford current installments.

Go with someone you trust

When taking out a personal loan, it is important that you work with a company you can trust to take your best interests to heart. This is easier said than done.

With so many banks out there, it is tough to make the right call. One option is to work with a financing company that has access to various trusted lenders and can assist you in finding a package suited to your specific loan objectives.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for personal loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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