The total outstanding personal loans amount to around $146 billion in Australia. Personal loans are a quick way to fund your immediate financial needs. The flexibility of getting a loan with minimum documentation and the option to repay it over a few years makes personal loans a top choice to meet the needs of the hour.
A quick internet search for the best personal loans Australia would throw up many choices, making it difficult to narrow down to one. Worry not, because here are some simple factors that let you compare the personal loan offerings to choose the best from the lot.
Key Factors to Examine When Applying for a Personal Loan
Listed below are the key factors that differentiate one personal loan offering from the other. It is recommended that you compare the loan based on these factors to get the best value.
The average interest rates for personal loans in Australia are between 12% and 14%. The first thing that any borrower would consider is the interest rate charged on a personal loan. The lower the interest rate, the better the loan. It thus pays to shop around a bit.
The online platforms are a great avenue to compare through various lender offerings. A small percentage difference can add to a huge saving, so comparing interest rates is critical.
You need to remember that the same lender could charge a different interest rate to every customer depending on his income stream and repayment history. Still, it is advised to browse thoroughly to narrow down those who charge a competitive interest rate.
There can be instances where a lender may charge you a low-interest rate, but when you add the charges, they prove to be costly. Loan processing fees, early repayment charges, fees on redrawing money, establishment fee, and early exit fee are things that should be considered. Make sure to get the key facts handy before you sign on the personal loan form.
The best personal loans are those that get sanctioned with minimum fuss. Lenders who ask for lots of documents and forms to be filled may end up delaying the disbursement. Document verification takes time, so if in immediate need, you are better off with a lender ready to approve the personal loan with minimum and basic documentation.
The average tenure for personal loans in the country is between 18 and 60 months. The loan tenure is another crucial factor to consider when deciding on a personal loan. The best loans are those that meet your financial requirements. The lender should offer tenure flexibility to let you choose what best fits your calculation.
The EMI amount depends on the loan tenure and if you are already stretched, then choosing a low tenure personal loan is indeed not the wisest choice. Keep in mind that a higher tenure means a higher interest payout, but it lets you manage your monthly finances well. So settle for a personal loan that does not create confusion and chaos.
Early Loan Repayment Option
Not all personal loan lenders would be happy about you repaying the loan amount early. However, a longer repayment period sums up to a high-interest amount. A lender charging a low-interest fee but with no prepayment option can be an expensive deal.
What if you need the money now but foresee a lump-sum credit in your bank account shortly? Then you are better off with a lender who offers a loan prepayment facility at a nominal charge.
Upper and Lower Limit of the Personal Loan Amount
This is again common sense. On the one hand, you want to avoid lenders with a minimum personal loan cap amount and push you to take more than you require. On the other hand, you also want to not approach lenders with a maximum cap amount that does not meet your requirements.
True Loan Cost
Selecting a personal loan based only on the interest rate is not an intelligent option. You need to work out the math and calculate the true cost of your loan, which lets you figure out if the option is viable.
Online personal loan calculators are a great way to screen through several personal loan offerings. Ensure that you set the same period and amount for each lender and then compare the cheapest among them. You can then go ahead and check the terms and clauses before finalising one.
Compare and Select
A personal loan comes with no spending constraints. It thus lets you meet all your financial obligations. All that you need to do is carefully read through the terms and conditions and pick the best personal loans in Australia that meet your financial goals. Personal loans are in demand, and with many lenders out there, the competition is stiff.