Your guide to shopping for a personal loan

Personal loans can be a game-changer when you need quick funds for big ideas.

Whether you're planning a dream wedding, renovating your home, or managing debt, a personal loan could help you cover the upfront costs.

With different types of personal loans available, it's about finding one that works for you.

Here’s a guide to help you shop with confidence.

What is a personal loan?

A personal loan is a sum of money borrowed from a lender to help fund a personal purchase or project. Personal loans are available from banks and other non-bank lenders for uses such as home renovations, holidays and covering unexpected expenses. Once your application is approved, you receive the money upfront and repay it with interest in regular instalments. 

Who can get a personal loan?  

Anyone over the age of 18 years old who is an Australian citizen or permanent resident can apply for a personal loan in Australia. To be eligible, the applicant must be currently employed and earn more than $20,000 per year. When you apply for a loan, the lender will assess your ability to repay the loan using several factors including your income, existing debts, expenses and credit score. 

What can I use a personal loan for?  

There are many uses for a personal loan including helping to fund home renovation projects, domestic and international holidays, weddings and celebrations, medical expenses, purchasing a car, and more. Personal loans can also be used to consolidate debt and help you to better manage multiple repayments. 

How does a personal loan work?  

The process of applying for a personal loan differs depending on the lender. Some lenders like Liberty allow you to apply via a simple online application. You may need to provide information such as the loan amount, duration, purpose, security, and details around your current income and debts. 

If your application is approved, the funds are deposited into your bank account as a lump sum payment. The length of the approval process varies between lenders, with some offering same-day funding.  

Once received, you can use the funds to bring your plans to life. You will also begin the loan repayments based on the agreed loan terms. The repayment amount and frequency will depend on how much you borrowed, the interest rate and loan term.  

What are the benefits of a personal loan?  

A personal loan could help you reach your goals sooner and avoid needing to delay plans or projects until you have the full amount saved. Funding plans with a personal loan also allows you to keep your cash savings available for any unexpected expenses. Online applications and fast turnaround times can make the process of securing a personal loan easy and fixed repayments support effective budgeting.    

Is it easy to apply for a personal loan?

The process of applying for a personal loan differs from lender to the lender. While some may ask for extra paperwork or require you to visit in person, others make the process nice and easy.

With Liberty, you can complete your online application quickly. If you accept your personal loan offer 3pm, you’ll have the funds in your account the same day.

Which personal loan is right for me? 

The right personal loan for you depends on your individual circumstances. Secured personal loans require you to use an asset as collateral, while unsecured personal loans do not. The loan amount, term, and repayments will depend on factors including your income, expenses, debts and credit score. You can use our online personal loan rate estimate to find out what rate applies to you. Checking your rate won’t affect your credit score. 

Should I choose a secured or unsecured personal loan?

A secured personal loan requires you to offer an asset, such as a car, as collateral. Since the lender has security if you can’t repay the loan, they tend to offer lower interest rates.

As unsecured personal loans don’t require collateral, interest rates are usually higher with the lender taking on more risk. This could be a good choice for borrowers with strong credit histories without an asset to put forward.

How do I compare personal loans?

When comparing personal loans, the comparison rate is a great place to start. It combines the interest rate with other fees and charges to give you a better understanding of the loan’s true cost.

While comparison rates are helpful, it’s also important to consider other factors such as the loan amount, loan term, and repayment options.

What is the best loan term?

Your loan term will impact how much you pay each month and how quickly you repay the loan in full.

A shorter loan term typically means higher repayments, so this could be best if it fits your budget, and you want to pay the loan off faster.

On the other hand, a longer term may lower your regular repayments, offering more affordability upfront. However, you could pay more interest overall.

What will my personal loan repayments be?

Your repayments will depend on things like the loan amount, interest rate, and loan term chosen. Some lenders also offer a choice of monthly, fortnightly, or weekly repayments, which can help make budgeting easier.

Before applying for a personal loan, consider using a loan repayment calculator to see how different terms and features could work for you.

Can I see my interest rate before applying?

Some lenders offer tools to give you an idea of your personal loan interest rate before applying. With Liberty's online rate estimate tool, you can find your personalised rate without impacting your credit score and it only takes a few minutes.

How do I get started?

If you’ve been thinking about applying for a personal loan, it could be easier and faster than you think.

Explore our flexible personal loan options today, and when you’re ready, apply online in just a few minutes.

Approved applicants only. Lending criteria apply. Fees and charges are payable. Liberty Financial Pty Ltd ACN 077 248 983 and Secure Funding Pty Ltd ABN 25 081 982 872 Australian Credit Licence 388133, together trading as Liberty Financial.