Your first Personal Loan - what to know before applying

You've got a goal to achieve or an opportunity to take advantage of. You just need the funds to make it happen. You know a personal loan is the way to go, but you've never had one before, and you're not quite sure how to make the best decision for your long-term financial health.

Good news. This guide has the answers to all of your questions. Read through and feel confident making an informed choice. Let's jump right into it!

What Is a personal loan?

A personal loan is money you borrow from a lender, like a bank. You agree to pay back the loan plus interest over a set period of time.

Interest is what the lender charges for giving you the money. It's expressed as a percentage and added to your loan amount at regular intervals. For example, if you borrow $10,000 with an interest rate of 8% over five years, the full cost of the loan will be almost $14,000, not including any fees or changes in your interest rate.  

The lower the interest rate, the less you'll pay over the life of the loan. Similarly, the shorter the loan term, the less you'll pay in interest.

Greater Bank

Another important consideration is secured and unsecured personal loans.

• A secured loan uses an asset as collateral. From the lender's perspective, these tend to be lower-risk loans. This means they might offer a lower rate.
• An unsecured loan doesn't require an asset. It's a higher-risk loan, so it typically comes with a higher rate.

Investing in you

Interest rate 8.99 % p.a.

Comparison rate 9.38 %^ p.a.

Unsecured Personal Loan - Fixed rates for 1-5 years

If you’ve got big plans, but aren’t able to provide security against a loan, check out our Unsecured Personal Loan. The perfect option for travelling, furthering your career, planning a wedding or even consolidating existing debt.

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Top considerations before applying for a personal loan

Taking out a personal loan is not a decision to be taken lightly. In the right circumstances, it can be hugely positive. You might throw the wedding of your dreams or score yourself a newer, safer car.

But there are also risks. To make sure a personal loan is right for you, consider the following:

• Can you afford it? Take a minute to run through your budgeting. Calculate how much you can realistically spend on your loan repayments. Be honest with yourself, and don't stretch your finances too thin. Late or missed payments can impact your ability to get other loans—including a mortgage—in the future.
• Do you know the rates and fees? Shop around for the best interest rates, but don't stop there. Compare fees too, as these can quickly add up over time.
• Does the loan term meet your needs? Is it flexible? A longer term means lower monthly payments but higher interest costs. Find out whether the loan allows you to make extra repayments too. This can save you a whole lot of money.
• Have you already applied for a personal loan? Avoid submitting too many applications, as each one will impact your credit score.
• Can you manage your loan online? If you're like most people, you do the vast majority of your banking online. Your loan management should fit this preference too. Look for lenders with user-friendly online services and even a mobile app where you can make payments and track your progress.

Ready to learn more?

Between finding the best rate, looking at the fees, and budgeting your long-term finances, there's a lot to think about before applying for your first personal loan. But with a smart and informed approach, you can achieve your goals while protecting your financial health.

Learn more about our personal loans today. If you have any questions at all or would like personalised guidance, don't hesitate to get in touch with our friendly team.