A guide to choosing a personal loan
Dreaming of your wedding? Planning a home improvement project? Or perhaps you'd like to consolidate debts? Whatever your goals are, a personal loan could be one way to help achieve them.
With many lenders to choose from, you may be unsure which personal loan could be right for you.
Should I shop around?
What do lenders consider when assessing a loan application?
Lenders consider many factors when assessing a loan application, such as income, credit history, existing debts and financial commitments, employment, residential stability and other information included in your application. Lenders use this information to assess whether you'll be able to comfortably manage the loan repayments. You could take steps to improve your chances of being approved, by reducing existing debts, always making loan repayments on time, having stable employment and income.
While being turned down for a personal loan can be disheartening. One idea to get back control of your financial situation is to find out from your lender why your application was declined, and to make sure the information on your credit file is accurate.
Choosing a lender
Before you apply, it might be a good idea to consider your options. There are many lenders offering different personal loan options. Making a list of the features and benefits that are important to you can help identify which personal loans could meet your requirements. Although the interest rate may be important, you should consider all features and benefits, to help you decide which of these may better suit your needs. For example:
- Are there application and ongoing monthly fees associated with the loan?
- Can you make extra repayments without paying early repayment fees?
- Do you want to provide security for the loan (e.g. a motor vehicle)?
- Do you want a fixed or variable interest rate?
Considering these features upfront may help you choose a loan that aligns with your goals and financial situation.
Is there a way to get your interest rate before applying?
What is an access seeker?
An access seeker1 is a person (or company) that is authorised by you to make an enquiry on your credit file. Put simply, it can access certain information from your credit report on your behalf to help provide an individual interest rate quote. An enquiry made by the access seeker does not impact your credit score, but it assists lenders to better understand your circumstances. While the interest rate is tailored to you, this is not a loan approval. Instead, it gives you an estimate of the rate you may qualify for based on the information available at the time. A personal loan application will still need to be submitted and is subject to assessment and verification by the lender.
Achieving your goals can be exciting. However, there are things you should consider before deciding if a personal loan could be right for you. It's worth taking the time to understand what you want from a loan before applying.
Want to know more? Contacting a broker could be a way to help you understand your options. Otherwise, our real-life guide to Personal Loans answers some of the common questions, outlines the application process and discusses important things to look out for.
Want to know more about personal loans?
To find out more about a Pepper Money Personal Loan or apply for an individual interest rate quote today, head to the get my rate tool or contact a Pepper Money personal loan accredited broker. Useful information about personal loans is also available on MoneySmart.
Got a question? Call us on 1300 108 794. We're here to help.
FAQs about personal loans
Shopping around may seem like a good idea, but applying for multiple personal loans can reduce your credit score. Each application leaves a record on your credit file. It’s often better to research your options and check your likely eligibility before applying.
Lenders assess factors such as your income, credit history, existing debts, financial commitments, employment and residential stability. This helps them decide whether you can comfortably manage the loan repayments.
You may improve your chances by reducing existing debts, making repayments on time, and maintaining stable employment and income. Checking your credit file for accuracy can also help.
It can help to compare features and benefits, not just the interest rate. Consider fees, whether you can make extra repayments without penalties, whether the loan is secured or unsecured, and if the interest rate is fixed or variable.
Some lenders let you check your personalised interest rate before applying. This can be done through a rate estimate tool or via a broker, and it typically does not impact your credit score.
An access seeker is a person or company you authorise to access certain information from your credit report. This helps provide an individual interest rate estimate and does not affect your credit score.
No. An interest rate estimate is not a loan approval. It is an indication of the rate you may qualify for. A full application still needs to be submitted and assessed by the lender.
Contributor | Vasè Marcevska, Head of Direct Sales – Mortgages and Personal Loans
Vasè has over 16 years of experience in the Banking and Finance sector, specifically within the Third Party and Consumer lending industry. Her expertise now focuses on enhancing our Customer program through a deep understanding of mortgage origination and service excellence across our Financial products.
Published by Pepper Money. Read our Editorial Policy to learn how we create and review content.
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Need some help with your personal loan?
Whether you’re confused about secured and unsecured loans, or just wondering how the whole process works; our resources are here to make sense of all that finance jargon.
Information provided is factual information only and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser.
All applications for credit are subject to credit assessment, eligibility criteria and lending limits. Terms, conditions, fees and charges apply.
Loan repayment terms range from 18 to 84 months for secured loans. Repayment terms range from 18 to 36 months for unsecured loans between $5000 and $7,999, and 18 to 84 months for unsecured loans from $8,000 to $40,000.
EXAMPLE: An unsecured personal loan of $30,000 borrowed over a term of 5 years with the minimum interest rate of 7.95% p.a. (9.56% p.a. comparison rate), would equate to an estimated minimum total amount payable of $38,610 via the weekly payment option (including a $495 establishment fee and $13 per month administration fee). Rates are subject to change.
PERSONALISED RATES AND REPAYMENTS: The interest rate and repayments are based on personalised pricing. The final interest rate and repayments you are offered (if approved) may change based on your personal financial circumstances or security details provided. In some circumstances, we may require further information in order to provide a final interest rate and repayments (if approved).
Pepper Money Personal Loans is a brand of Pepper Money Limited. Credit is provided by Now Finance Group Pty Ltd, Australian Credit Licence Number 425142 as agent for NF Finco 2 Pty Limited ACN 164 213 030. Personal information for Pepper Money Personal Loans is collected, used and disclosed in accordance with Pepper’s Privacy Policy & the credit provider’s Privacy Policy.
Pepper Money Limited ABN 55 094 317 665; AFSL and Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans.
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