Types of Personal Loans

Find out more about the various different personal loan types so you can start comparing your options with Savvy.

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, updated on October 4th, 2023       

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What types of personal loans can I choose from?

Unsecured personal loans

Unsecured personal loans are perhaps the most commonly sought type of personal finance, as there is no requirement for applicants to put up an asset as security for the loan. You can typically borrow up to $75,000 with an unsecured personal loan. Sidestepping the security factor makes these loans one of the quickest to process and easiest to be approved for.

Because of this lack of security, though, unsecured personal loans come with higher interest rates and fees than their secured counterparts. With the lender not having anything concrete to fall back on in the event that a borrower becomes unable to pay off their loan, part of mitigating the risk that these loans pose is raising associated costs.

Secured personal loans

Unlike unsecured loans, secured personal loans do require the borrower to affix an asset as collateral as part of their financing agreement. Assets that can be used as security for these loans can include a car or another vehicle, valuable assets like jewellery, art or antiques and a term deposit.

The primary benefit of security in a personal loan is the discount on interest and fees as part of the loan, as well as a potential increase in your borrowing power up to $100,000 in some cases. However, securing an asset limits your control over it, as it prevents you from selling or upgrading it in the time that you’re repaying your loan.

Debt consolidation loans

These are ostensibly the same as an unsecured (in most cases) or secured personal loan. However, they’re taken out for the express purpose of grouping your outstanding debts under one roof. This is incredible useful, as it can make them more manageable, particularly if they all fall on different pay cycles.

It’s also important when it comes to high-interest debts such as those of credit cards, which can easily get out of hand if you fall behind on repayments. Grouping these loans into one payment can help you save a considerable amount of money.

Line of credit loans

A line of credit loan is different to the regular personal loans mentioned above in several key areas. With a line of credit, you’re approved for a set monetary limit, up to which you can withdraw funds whenever you like. These loans come without a set repayment schedule and only charge interest on the funds you owe.

The important thing to note about these particular loans is that they come with higher interest rates and account-keeping fees than a standard personal loan would, so it’s not encouraged that you sit on your loan for too long.

Student and guarantor personal loan

There are also personal loans designed for use for students who need to take out a loan to pay for any manner of things, such as accommodation or educational expenses like textbooks, a computer or further external training.

While these are only generally available for lower amounts at higher rates, one way to remedy both of these is by finding a guarantor. This is usually a parent who agrees to take on the loan should you fail to do so, adding much-needed security and enabling you to borrow more and save.


Overdrafts are like a personal loan, but attached to your bank account. These enable you to withdraw from your account beyond $0 up to a pre-set limit, after which you repay at your own leisure with no set repayment schedule.

Another of the advantages of this type of financing is that you’re only charged interest on the funds you use in any given month, giving you the flexibility to access the funds as you need them. However, interest rates can be quite high on overdrafts, so they may not always be the right option for you.

Small personal loans

Small loans, or instant cash loans, are structured differently to standard personal loans and offer a fast and easy alternative for applicants who are after smaller loan amounts. These loans range from $300 to $5,000 over terms of 16 days up to two years and can be turned around as quickly as one hour after submitting your application.

Eligibility requirements are much broader with these loans, making them more widely accessible to those who wouldn’t otherwise be approved for a standard loan. Fees are fixed and capped, so you’ll know what you’re paying from the outset, and you can pay your loan out early if you wish to.

How to choose the right personal loan

Frequently asked questions about types of personal loans

How quickly can I be approved?

You can receive an instant outcome just 60 seconds after you apply for your personal loan, with money able to be transferred directly to your account within 24 hours. Secured personal loans tend to take a bit longer, however.

What can I use my personal loan for?

Just about anything you like: personal loans are versatile by design, so you can make use of them to improve your home, pay for medical expenses or even a holiday. How you distribute your funds is entirely up to you, as long as you can repay your loan on time.

Should I choose a fixed or variable interest rate on my personal loan?

Both fixed and variable interest rates offer benefits for borrowers. Fixed rates stay the same throughout the loan, which enables more accurate budgeting and protects against rate rises. Variable rates fluctuate depending on the market, so rate falls will benefit borrowers.

Can I pay off my loan before the end of my term?

Yes – you can compare personal loans with no early repayment fees right here with Savvy. We’re partnered with a range of flexible financiers who can offer you the freedom to pay off your loan as quickly as you like, without suffering any financial consequences for doing so.

Can I take out a personal loan on Centrelink benefits?

Yes – many lenders will accept Centrelink income as part of your personal loan application, provided that it’s only a supplementary income source and is a non-conditional payment (conditional payments include JobSeeker, Youth Allowance and Austudy).

What are the eligibility requirements for personal loans?

Some of the criteria you’ll generally need to meet when applying for personal loans include:

  • 18 years old
  • Stable employment and income
  • Earning at least $20,000 annually
  • No history of defaults or bankruptcy
  • Australian citizen or permanent resident
Am I still eligible if I have bad credit?

Yes – bad credit personal loans are tailored to fit the limitations of borrowers who carry imperfect or bad credit scores. While this would ordinarily rule them out from personal financing, smaller online lenders offer these loans to open doors for those in this position, albeit with higher interest rates and fees and a maximum borrowing cap of up to $12,000.

If I’m a pensioner, what types of personal loans can I get?

Pensioners and retirees have access to instant cash loans, which are determined not so much by credit scores and more so by the ability to repay the loan comfortably. Alternatively, you can apply for a Centrelink cash advance of over $1,000, which will be taken out of your future payments.

What happens if I can’t supply the right documentation?

You can apply for a low doc personal loan, which enables sole traders to instead use documents like BAS, profit and loss and bank statements to indicate their income. These loans are also considered a greater risk to their lenders, so interest rates and fees will be steeper as a result.

Helpful personal loan guides