Best Small Loans Australia
Fast and easy small loans across Australia. Apply and get approved in 60 seconds.
It goes without saying that when it comes to any purchase, whether that be finance, insurance, a new tv or car, you want to have peace of mind that you select the right company. With so many options available in the market for loans, it can be a daunting task to compare and select the right company and product regardless of whether it's only a small $2,050 loan or a larger amount of $5,000. It's important to understand fees, charges, terms, conditions and after-sales support.
What is a small loan?
A small loan is a type of unsecured personal loan ranging from $2,050 to $5,000. They may also be referenced as a “cash loan or “short term instant loan”. There are several benefits in opting for a small loan rather than a credit card which include the following:
- Interest and repayments are fixed and known upfront
- Interest rates can be similar
- It's not a revolving credit line which at times can lead to ongoing unnecessary use of credit
- Significantly more flexible lending guidelines: unlike credit cards which are mainly issued by major banks, small loans come from non-banks. Non-banks are more open to diverse risks, making it easier to get approved compared to a credit card from the bank.
What can a small loan be used for?
In Australia, a small personal loan can be used for a wide variety of reasons, any worthwhile purpose is accepted which can include:
- Engagement ring
- Emergency expenses
- Debt consolidation
- Cheap car
It's important to note that your loan could be used for multiple purposes. For instance, let's say you took out $5,000. You could use $1,500 to buy a new fridge and washer, $2,000 for a weekend away and the remaining $1,500 for car repairs. All lenders will send approved funds into your selected bank account, where you can use the funds at your discretion.
How do I select the right lender?
No matter if you're looking for a cash loan in Adelaide, Sydney or Melbourne, the cash loan industry in Australia is quite large. It's estimated that more than one million Australians took out small loans last year. Due to there being such a large demand for this service, it has resulted in a large number of lenders in this space, so how do you select the right one?
Firstly, regulators have placed strict consumer protections through Consumer Credit Legislation Amendment (Enhancements) Act 2012 for small loan lenders. The provision includes the following:
- Lenders are capped & only permitted to charge a fixed amount set by the regulator for a loan. This is a maximum establishment fee of $400 and maximum monthly fees of no more than 48% of the loan amount over 12 months.
- Loans up to $2,000 that previously were required to be paid within 15 days has been banned.
- If you default on a small loan, you cannot be charged more than the original loan amount on top.
- Responsible lending applies, meaning that the lender cannot place you into another loan if you are already severely in arrears on a current loan.
Considering all the above legislation, with a tightly controlled and regulated pricing structure, it shouldn’t matter which company you use, right? One could assume this, but that wouldn’t be wise – while these regulations provide a guideline for the maximum amount a lender can charge, they don't factor in lender-to-lender price and policy competition.
Whether you're chasing a cash loan in Perth or Broken Hill, every customer is different, and most lenders work on a ‘Rate for Risk’ basis. What this means is that if you're determined to be of less risk for a particular lender, they'll reward you with a cheaper rate. If they deem you to be of higher risk due to a previous default or a recent slow account on another small loan, they may still be prepared to lend to you, but they may charge you a higher rate.
Some small personal loan lenders have different tiers starting with cheaper establishment & monthly fees going up to the maximum from there.
When you're looking at loans from $2,050 to $5,000, rates can start for low-risk customers at 12% excluding fee’s going up to the maximum 48%, excluding fees.
Some lenders specialise in bad credit and are only prepared to lend to a higher risk. Those lenders will generally charge the maximum amount due to the high risk, but for that customer, fees and charges may not be important, making getting the loan at a slightly higher rate worth it, considering what it may cost to not have access to those funds at all. These lenders focus more attention on your income/expenses rather than your credit score. Other customers who have strong credit scores should be reviewing fees, charges and terms to drive the cheapest price. A good credit score shows that it's unlikely the lender will have issues with collections and should, therefore, be able to provide you with better pricing.
After sales support
Apart from fees and charges, you want to select a company that is reputable, has time in the industry and builds a relationship with its clients. Reviewing testimonials online through product review, Google reviews or any other platform is advised. Reading these reviews will give you great insight as to what your experience will be like, based on what previous customers have experienced.
What kind of flexibility does your loan offer? Does it offer extra repayments without fees? Can you out your loan early without discharge costs? These are areas that need to be reviewed.
We are proud as Savvy to partner with many of Australia’s most reputable small loan lenders. We have a diverse panel that can help out all different types of customers and profiles, some that reward strong credit scores and others that are prepared to look outside the box to get the difficult application across the line. All of our lenders are reputable with many years of experience. They have high customer satisfaction ratings and provide loan flexibility.
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The information on this website is of general nature and does not take into consideration your objectives, financial situation or needs.
For loans between $2,050 and $5,000, the APR is between 21.24% (minimum) and 48% (maximum) per annum. Comparison rate of 65.4962%. Minimum term is 16 days and maximum term is 24 months. The cost of the loan is a $400 establishment fee and monthly interest charged on the amount borrowed. For example, a loan of $3,000 over 3 months with an APR of 48%, (comparison rate of 65.4962%), will have an establishment fee of $400, monthly repayments of $1,225.20. Total repayments of $3,675.60 and total interest payment of $275.60.
Warning: A comparison rate indicates the true cost of a 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.