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Ultimate Guide to Personal Loans

Chapter 2

Advantages & Disadvantages of personal loans

Chapter 3

Should I get a personal Loan?

Chapter 4

What are the different types of personal loans?

Chapter 5

How to compare personal loans?

Chapter 6

How to lower interest rates?

Chapter 7

Ways to reduce your monthly repayments

What is a Personal Loan?

A personal loan is a loan where the funds from the loan are paid usually directly to the applicant, and can be used for almost any purpose. Whether you’re going on a holiday, buying an engagement ring, planning a wedding, or just looking to consolidate some existing debt, taking out a personal loan can be a much better option in a lot of circumstances than taking the time to save. A personal loan is usually unsecured (no collateral for the lender to re-posses) however secured personal loans are an option in some circumstances to lower the risk of the application, which can either attain you a better interest rate, or get a borderline application approved. By taking out a personal loan, you can live your life the way you want, and within your budget. You can go on that holiday now, or buy that engagement ring and pop the question without you having to save for months leaving your partner wondering if, and when it will happen.

woman celebrating getting a personal loan

Advantages & Disadvantages of personal loans

Advantages

Disadvantages

Funds can be used for any purpose

Where car loans, and home loans for example have a specific purpose, a personal loan can be used for anything you need the money for. The money gets paid into your bank account and you spend it as you please

Don't wait to live your life

Taking out a personal loan gives you freedom to live life the way you want, when you want, without having to make sacrifices to attain the savings required for their purpose

Flexible lending terms

With a personal loan, all the choices are still yours. It’s up to you how much you borrow, how long you take out the finance for, and all of our loans provide you the option of making additional repayments to reduce your interest expense and pay out your loan early.

Quick processing

Our experience and access to the latest fin tech allows industry leading turn around times. Same day approvals and quick settlements means your life will always run on time as you're never delayed whilst awaiting funds.

We compare more so you save more

At Credit Capital, we have access to most major motorbike lenders in Australia. With our portfolio of more than 25 lenders, we compare more so you can be sure you're always saving more.

Interest rates are usually higher than asset loans

As a personal loan offers you the freedom of spending the money how you please, and personal loans are usually unsecured, lenders see personal loans as higher risk compared with asset loans. Being higher risk, personal loans usually attract higher interest rates.

Flexibility of lending terms can be slightly more restrictive than car loans

Lending terms are still very flexible, however, most personal loan lenders don't allow loan terms greater than 5 years, and you're unable to have a residual or balloon payment at the end of the loan term.

Documentation in some circumstances can be more stringent

Most personal loans require less documentation than asset loans, depending on which lender you go through. In some circumstances however the lender will require evidence of what the money will be used for. If the money is being used for a holiday, you may have to provide your itinerary, however if it is for debt consolidation, you may be required to provide full statements and payout letters for all accounts being consolidated.

Should I Get a Personal Loan?

Struggling to keep up with multiple debt repayments?

It's easy for things to get out of hand. You get a credit card, then a store card, a high interest car loan the dealership talked you into taking, then all of a sudden you have multiple debt repayments each month which are hard to keep track of. Consolidating into 1 personal loan doesn't only make things easier for you, it can save you money in the long run by potentially reducing fees and interest you're currently paying.

man with a pen in hand thinking about his car

Getting married?

If you've ever looked at engagement rings, or planned a wedding, you know very well costs can add up astonishingly quick. Whatever you budget for at the start is almost always exceeded. Most of us hope to only get married once in our lifetime, so we want the day to be special, as well as the honeymoon of course. By taking out a personal loan you won't have to compromise on your special day, you can have it all.

Young woman smiling interested in getting a car loan

Need a holiday but don't have the savings?

Timing is everything in the world we live in. Between juggling your annual leave entitlements, kids’ school holidays, and seasonal fluctuations in holiday pricing, you may only get a limited window of opportunity each year to take the family away on a much needed holiday. Most Australian families don’t have the savings to pay for a holiday when the opportunity suddenly presents itself. You could be left facing some tough decisions: sacrificing Christmas presents for the kids could be an option, or you could miss out on the opportunity all together.

young mum thinking about what type of car she will need for here family

Renovating or landscaping around the house?

Your house is your home, and you want it to be perfect. When you wake up there each day, you need everything to be just the way you want it to be or you will constantly have that feeling inside that things could be better. Why wait? Redrawing on your mortgage can be a very time consuming, and often difficult process. Especially if you've just moved in, it may not even be an option at all. Taking out a personal loan means you live life without compromise, and you can go home each day to your dream home you've always pictured.

Why Choose Credit Capital Personal Loans?

At Credit Capital, we have access to all the major non-bank personal loan lenders that can personalise a product to meet your individual needs. Where most major banks offer personal loan interest rates between 14-16% for their good existing customers, our average customer will save between 5-10% off the interest rate for an unsecured personal loan, depending on loan size and term of loan. We can even offer secured personal loans to lower the interest rate even further. If you own a car, boat, caravan, or motorbike outright, you can offer that up as security to increase your chances of approval and lower your interest rate.

woman looking out
planning trip with map on table

How are Credit Capital Personal Loans Different?

The main advantage of our personal loans, is the surprisingly quick turnaround times. Most of our personal loan lenders utilise the latest in Fintech to ensure a smooth process and get the best result for everyone involved. In most circumstances you can do the full process on your smart phone, including sending documents and electronically signing your loan contracts. It is not uncommon for us to speak to someone in the morning, and have their personal loan not only approved, but also settled that afternoon. Enquire online or call one of our dedicated consultants today to find out more.

What are the Different Types of Personal Loans?

Unsecured personal loan

This is the most common type of personal loan where there is no security, also known as collateral, attached to the loan. This means if you default on a personal loan, the lender does not repossess anything from you to recover their loss. It is mostly due to this fact that personal loans have much higher interest rates compared with secured asset loans. As the lender has no means of recovering their loss if you default on the loan, the transaction is deemed higher risk by the lender. In the rate for risk world we live in, higher risk means higher rate.

Secured personal loan

A secured personal loan is a personal loan with security, or collateral attached that the lender can repossess if the loan goes to default. The asset offered up as security needs to be registered in the applicant's name, and can be either a car, boat, motorbike, or caravan. Depending on which lender you go through, there are usually terms and conditions around acceptable ages and values of the asset being offered as security. For example: a lender probably won't take security over a 1995 Hyundai Excel as there wouldn't be any value for them if they had to go through the costly process of repossessing the asset. Secured personal loans can be beneficial as they will lower the risk of the application to the lender. This can mean a lower interest rate will be offered, or it could mean a borderline application gets approved that wouldn't have been approved otherwise.

How to Compare Personal Loans?

Don't focus on rate

We hear it all the time. When people shop around for finance, they call up a range of brokers and finance companies and ask, “What is your rate?”

Although interest rates are an important factor when it comes to comparing loans, it is only one of many factors.

The lowest interest rate isn’t always the best deal. All lenders have very different fee structures. Some lenders offer incredibly low rates but will have high set up fees. Some lenders may have low set up fees but high monthly account keeping fees. Some lenders may have next to no set up or ongoing fees, but may have astonishingly high early exit fees. 

The important thing when comparing is to look at the overall package. You need to understand your budget, and requirements, and work backwards from there to ensure that what you’re looking at, is best suited to you. It won’t make sense to go for the lowest cost loan, that has extraordinary early exit charges, if you only plan on having the loan for a short time and then paying out early

If you don’t plan on paying out the loan early, then the main thing for you to focus on is your bottom line. Forget about rate, forget about fees, focus on your monthly repayment including everything. This will let you know exactly how much money will be coming out of your bank, and will let you know exactly what your cost of loan is.

We compare more so you save more

At Credit Capital, with access to more than 25 of Australia’s major finance lenders, we compare more so you save more.

We are independent and privately owned, so give unbiased advice when it comes to getting you the best deal.

We work for a flat service fee which is included within the set up costs of your loan, and the fee doesn’t change if we attain a higher or lower interest rate for you.

This makes it very easy for you to compare our repayment with others to see which deal is best for you.

You don’t pay anything up front, and the fee is only applied if you get a loan through us, meaning if we don’t earn your business, we don’t get paid. This makes it in our best interest to get you the best deal, every time, so we can earn your business for life.

How to Lower Interest Rates?

Rate for risk

It’s a saying you’ve probably heard so many times by now that it’s almost lost all meaning.

But when it comes to finance, the interest rate the lender applies varies based on the risk of the application.

The higher risk the application, the more likely you are to default, or the less likely the lender will be able to recover their loss if they have to repossess the car, the more the lender has to charge to offset their risk.

Lowering your risk

To lower your interest rate you need to lower your risk. There are many factors that lenders look at when calculating the risk of your application.

How long have you been in your job? Are you full time employed? Part time? or casual?

Residential history is important as well. Whether you’re renting, boarding, have a mortgage, or own your property outright, are all taken into account by the lender to calculate your risk.

Some factors you won’t have much control over, there are some things though that you can control.

How to lower risk

Well conducted current accounts - With almost all personal loans, as a minimum the lender will assess the last 3 months of your bank statements to see how your accounts are conducted and determine your risk based off your pattern of spending. If you regularly overdraw your account, if there is a high level of gambling conduct, or regular withdrawals of large amounts of cash from pub ATMs, these can demonstrate a high risk pattern of spending that can get your application declined. If you have current loans, the lender will often want to see statements of those as well.

How do lenders access risk?

If your funds aren't being managed the best, or if you have late payments on your existing debt, it would probably be best to wait until you're in a more stable financial position before applying. Some people will apply regardless, just to see what happens, however getting an application declined will make it much harder for you to get approved when you are in a better position. Firstly, your credit score is reduced with every application that is submitted through to a lender. The main thing however, once a lender sees the bad, they can't un-see it. For example: if you have an application declined due to a high level of gambling conduct on your bank statements, when you re-apply, your application will be viewed with much greater scrutiny. You may have reduced your gambling considerably and only have a cheeky punt on your favourite team once or twice a month now, but given the fact the lender had seen how risky things were previously, you could still be declinedbased on gambling conduct as it is not non existent. If the lender hadn't seen the worst of it, they wouldn't scrutinise a low level of gambling so heavily.

Timing is key

If you’re unsure whether your application will be suitable for approval or not, talk to one of our finance professionals today.

For no cost, and with no obligation, we can do a full assessment of your circumstances and statements, and give accurate advice regarding whether you’re in a position for a finance approval, or if not, we provide a clear list of instructions of what needs to be done on your end so we can help you out in the near future.

We ensure every time, that your application is presented at the best time, to ensure you will always get the best result and best deal.

Ways to Reduce Your Monthly Repayments

Borrow Less

It may sound simple, but the less you borrow, the lower your repayments will be. When applying for a personal loan, don’t pick a round figure that will be large enough to cover what you need, do the work up front to work out the exact amount you need so your loan value, and repayments, will be reduced from day 1.

Extend the loan term

Many lenders these days will allow you to finance personal loans up to 7 years. The longer period you extend the finance for, the lower your repayments will be. This can be a great option if you don’t want the repayment to have as much of an impact on your budget, however a longer term can also mean you will pay more in interest.

Speak to one of our professional consultants today to get free general advice on what might work best for you.

Reduce your risk

Refer to Chapter 6 regarding how to lower your risk. By lowering your risk you could be entitled to a lower interest rate meaning your repayments are reduced throughout the loan.

Refinance and consolidate

If you’re applying for a personal loan, and you already have existing debt, whether it be a credit card, or a car loan, by increasing your personal loan and consolidating your additional debt, you could be significantly reducing your overall monthly loan payments.

Not only will the monthly payments be lower across all accounts, but managing 1 repayment as opposed to multiple will make things much easier as well. The thing to consider when looking at this option, is whether or not you will be increasing your cost of debt by doing so.

You might be consolidating a low interest car loan with 2 years left to go, into a personal loan with a higher interest rate that will run for a 5 year term. It may be beneficial for you to do so given your repayments will be reduced, however it is important to understand that you will be increasing your interest expense on your existing car loan in this example.

It is up to you to determine what is best for you, our consultants are here however to help you crunch numbers across all scenarios to assist you making that decision.

How to apply for a personal loan

1. Find out your budget

Before approaching any lenders, the most important thing for you to know is how much you can afford each month. This is important so when ou are presented with a quote, you will be able to see quite quickly whether or not the product is suitable to your needs.

2. What is the purpose

Whether you’re looking to consolidate debt, or needing funds for home renovations, everyone has different wants and needs when it comes to taking out finance. The more you can let us know about what you want or what you need, the better we are able to fulfil your dream.

3. Prepare Documentation

When it comes to taking out finance, there is no such thing as too much documentation. We will always strive to make the process as smooth as possible with the minimum amount of documentation, however, the more prepared you are, the quicker we can make the process for you. Be prepared with IDs, residential and employment histories, payslips, or tax returns and profit and loss statements if you’re self-employed. The more prepared you are the more efficient we are.

4. Speak to a Professional and apply

Once you know the above, enquire online or call us directly and we can help you with the rest. If there’s anything above you need assistance with, not to worry, our devoted team can answer all your questions and find the deal that best suits your requirements. We can guide you along the way no matter how early, or late, in the process you are. We put your mind at ease and make finding the best deal easy from start to finish.

Book a free consultation with one of our experts today!

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