The benefits of personal loans for Melbourne residents
Through Savvy, you can compare a wide range of personal loan offers with rates tailored to your profile, helping you choose the cheapest deal available with more confidence.
Personal loans can be taken out over a period as short as one year and as long as seven, so you have a major say in the cost of your monthly repayments.
You can take out a personal loan and use it for significant outlays up to $75,000 or a small helping hand as low as $2,000; they’re versatile to suit your needs.
Applications are fast and simple and can be processed rapidly, with your lender generally able to forward your approved funds directly into your account in just 24 hours.
When you get a quote from your lender and receive your personal loan interest rate, it won’t be immediately registered on your credit file, giving you the option to compare further.
Types of personal loan
With an unsecured personal loan, you can potentially borrow as much as $75,000 without the need to attach any valuable assets, such as your car, as security. These loans are the most widely available and often the quickest, with same-day approval possible.
Secured personal loans, on the other hand, make use of collateral. This lowers your risk profile in the eyes of a lender, potentially lowering your interest rate and expanding your borrowing power beyond what you may be able to get through an unsecured loan.
Variable interest rates remain open to fluctuation during your term. This means you can benefit from decreasing rates and save on your loan if the market heads in that direction, although you’ll also pay more if rates start rising.
Fixed interest rates are locked at the beginning of your loan and remain constant throughout your repayments. This acts as a valuable protection against interest rate increases, as your loan will be unaffected, but you’ll miss out on potential drops as well.
If you’re paying off multiple debts at the moment, particularly those with high interest (such as credit card debts), consolidating them into one payment can not only make them more convenient to manage but also potentially save you money overall.
Looking to take off on a holiday with your family but want to pay it off at your own speed? Travelling can be expensive, so you can distribute the cost of your next trip over a period you’re more comfortable with by taking out a personal loan to pay for it.
There are so many costs that go into making your dream wedding a reality, from venue hire to catering to dresses and suits and so much more. By taking out a personal loan, you can start planning the big day you want, even if you can’t pay for it upfront.
Home improvements are desirable for a range of homeowners to help keep their living space fresh and interesting, not to mention increase its value. You can get past the financial hit of renovations with a personal loan paid in instalments.
Personal loans aren’t limited to PAYG employees, though. If you’re running your own business, you can still be approved for financing by submitting tax returns and other alternative documents instead of payslips and utilise your funds however you wish.
There’s a variety of expenses which come with being a student, ranging from the cost of your courses, textbooks and computer to your accommodation. Taking out a personal loan can make these costs more manageable by spacing them out.
Some lenders offer green personal loans, which are designed to be used for energy-efficient appliances and products such as solar panel and air conditioning installation in your home. You can qualify for lower interest rates and fees with this loan.
Why compare personal loans through Savvy?
How to save money on your personal loan
If you enter the personal loan application process with a healthy credit rating, you’re more likely to be offered a lower interest rate and fees.
This is because your credit score is an indicator of your history taking on and repaying debt, whether that be via other loans or simply repaying household bills.
The more reliable you are at doing these promptly and in full, the higher your credit score and the lower your interest rate. This isn’t the only factor that can shape your rate, but it’s certainly an important one that can save you money overall.
Frequently asked questions about personal loans in Melbourne
More about personal loans in Melbourne
How should I compare personal loans in Melbourne?
Comparing as many personal loan offers as you can is one of the most important steps you can take before submitting your application for financing in Melbourne. This will help you pick out the deal which is best for your needs with more confidence than if you simply applied for the first loan you saw. Fortunately, you can do just that right here with Savvy. We’re partnered with online lenders from around Australia who can work with you no matter where you live across Victoria and provide you with the tools to contrast offers accurately and effectively.
Some of the main areas to consider when comparing personal finance offers with Savvy are:
There’s not much point in applying for a loan where you don’t meet all of the criteria set by your lender. This is the first hurdle in many respects to getting approved for finance: ensuring you meet the qualification requirements. These can vary depending on the lender you choose to go with but they remain largely consistent in most cases. The primary factors to consider are:
- You must be at least 18 years of age
- You must be an Australian citizen, permanent resident or eligible visa holder
- You must be employed and earning an income of at least $20,000 from stable sources
- You must have a good credit history and no record of defaults, bankruptcy or court judgments
Of course, the lender you’re applying to should be able to offer you the amount you’re after. Different lenders will have different limits set in stone when it comes to their available loan terms, with some capping their loans as high as $75,000 and others maxing out at $50,000. Similarly, there are lenders willing to approve applications for amounts as small as $2,000, but many will impose minimums of $5,000. Don’t settle for more or less than you need; compare thoroughly to find a financier who matches your personal requirements.
The most significant influence on the cost of your personal loan is its interest rate. It’s perhaps most important to get this aspect of your loan right, as it can be the difference between you saving and spending hundreds of dollars. For instance, a $30,000, five-year personal loan at 7.5% p.a. would cost you just under $6,000 in interest but opting for a 9% p.a. rate instead would set you back over $1,280 more. By comparing your finance options closely, you can be more confident in finding the deal with the lowest rate.
On top of interest, there’s a variety of fees which can be charged on your personal loans. Unlike interest, though, these aren’t always present on loan agreements, making it extra important for you to find lenders who offer low-fee or no-fee loans. The main charges to keep an eye on in the comparison process are establishment and ongoing fees. Establishment costs are one-off fees at the beginning of your loan which can cost up to $595, while ongoing charges occur every month and can set you back as much as $10. Lenders often don’t charge either or both of these, though.
You should always be as close to 100% comfortable as possible when repaying your loan, so locking in your ideal repayment term is a must. Like loan amounts, these differ depending on the lender you choose to go with. For example, while the full range of one to seven years is offered by many lenders, others will only set their available terms at either a maximum of five years or a minimum of three. If you find yourself needing to borrow at either end of the spectrum, you should always find a lender which can meet your preferences.
You should always have the ability to pay off your loan ahead of schedule if you find yourself in a position to down the track. The more you can pay prior to the set conclusion of your agreement, the more you’ll save overall on interest. This is because the amount of interest you owe will fall at a sharper rate in line with your decreasing amount owed. As an example, you’d save $937 and cut seven months off your loan term if you contributed $100 extra each month on a $40,000, five-year loan at 6.5% p.a. Having the freedom to do this without incurring any charges is crucial.
Other useful features
There are other features which might come in handy on your personal loan. One example is a redraw facility, which enables you to draw funds from any additional payments made across your term. This saves you from having to seek out another loan agreement to access the funds you need, although it can stretch out the term of your loan and cost you more interest to withdraw these funds. You should also look for loans which allow you to pick between monthly, fortnightly and weekly repayment schedules in line with your preferences as a borrower.
Which factors can impact my borrowing power?
The amount you’re approved for isn’t as simple as asking for a number and having your application signed off on. There are a variety of factors which go into determining how much you can afford to take on as a borrower. These include:
The type of loan you choose
As mentioned, offering loan security can increase your potential borrowing power from a maximum of $75,000 to $100,000. However, the amount you’re approved for will have to correlate to the value of the asset you’re attaching as collateral. For instance, if your car was worth $20,000, you wouldn’t be approved for a personal loan application of $100,000. The idea is that, in the event you become unable to repay your loan, your lender can acquire the asset and sell it to recoup any lost funds (although this is a last resort).
Of course, you’ll have to show that you’re earning enough to support your loan’s repayments. Lenders won’t want to put you under any financial stress when it comes to managing your instalments, such as approving you for a loan which takes up more than 50% of your disposable income. The more you earn and the more funds you have available, the more you’ll be able to pay each month and borrow overall as a result.
Not only is your income important, but also how you earn it. Lenders want to be as certain as possible that your ability to repay your loan won’t be hampered across your term by a dramatic change of scenery in your working life, such as being made redundant or having your shifts cut as a casual worker. Those who are holding down full-time employment or have stayed in the same job and industry for an extended period are more likely to be approved for greater sums, particularly compared to new casual and self-employed workers.
Your regular expenses and any outstanding liabilities will also come into play when determining what you’re able to afford as a borrower. These costs eat into your income and disposable funds, so financiers will carefully consider them when assessing your borrowing power. By paying off any outstanding loan or credit card debts, as well as trimming down on any other regular expenses wherever possible, you can increase your overall borrowing power and clear your slate as you enter your loan agreement.
Your credit history
Finally, lenders will want to see evidence of positive credit behaviour when assessing your suitability for finance. Your credit score and history will show how you’ve fared in the past in terms of similar loan debts and other areas such as paying bills on time. A strong score indicates a trustworthy borrower who can be trusted to service debts reliably. In many cases, it can be the difference between being approved for a greater score and not.
Helpful personal loan guides
Still looking for the right personal loan?
Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.