Personal Loans Tips
| Personal Loans # 1 |
Avoid unsecured loans if possible
Avoid using unsecured personal loans if you can put up some security for your borrowings. This will get you a lower interest rate. A home equity loan, or redraw of extra repayments, allowing you to borrow against the equity built up in your own home or an investment property, is the best option of all, and could get you finance at up to 5 percent less than a car loan. |
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| Personal Loans # 2 |
Be honest in loan applications
Be honest about why you want the loan. Your bank may be able to offer you a loan option that better suits your circumstances. There are an increasing variety of different types of personal credit these days; car loans, commercial loans, leases, home equity loans, are just some of the examples. |
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| Personal Loans # 3 |
Can't get a loan? There are alternatives
If the banks, building societies and credit unions won't lend to you because you're self employed, newly arrived in the country or have a poor credit history, consider the booming non-conforming and "low doc" loan market. A number of non-bank lenders offer loans which especially cater for this type of borrower. The interest rates on non-conforming loans are generally higher but come down after a few years of on-time repayments. Compare non-conforming and low doc loans. |
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| Personal Loans # 4 |
Consider smaller lenders too
When shopping around for a personal loan, consider community banks, credit unions and other smaller financial institutions which might be more approachable, and offer lower interest too. |
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| Personal Loans # 5 |
Do you have to take out a personal loan at all?
Think twice before borrowing money without security. You may have a better option already available; home equity extension to your home loan, a new loan that uses your property as security, a credit card, or even a rich relative. |
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| Personal Loans # 6 |
Do you qualify for a 'relationship discount'?
Relationship discounts are available from banks and credit unions for those borrowers who consolidate a range of banking business with the one institution. Home and personal loan interest rate discounts, term deposit bonuses, savings account fee waivers and credit card annual fee waivers are commonly offered. |
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| Personal Loans # 7 |
Don't make multiple applications
Don’t fill out applications at several financial institutions and have all of them checking into your credit history. This can make you look desperate and lower your credit score. |
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| Personal Loans # 8 |
Don't rely solely on comparison rates
All lenders must now include "comparison rates" in advertisements for their personal loans to help consumers get a feel for their total cost - fees and the interest. Don't rely solely on comparison rates when choosing a loan and beware of their shortcomings. They only take into account fees and interest rates, not the features and how suitable the loan is for your circumstances. |
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| Personal Loans # 9 |
Have you considered a credit card?
Consider also a credit card as your source of credit. Interest rates are generally higher but credit cards are easier to secure and offer greater flexibility of repayments.
Check our credit card selector to compare cards that suit your needs. |
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| Personal Loans # 10 |
Keep accurate records
Keep accurate records of your deposits and ATM transactions. It is also wise to keep copies of your loan application and approval documents in a safe place.
This is the best way to avoid hefty fees which may be charged by a bank when its customers want to see copies of their cheques or loan files. |
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| Personal Loans # 11 |
Know what interest rate applies
When offered personal finance always be sure you know what interest rate applies. Lenders often ‘sell’ you their finance packages by quoting the monthly repayments only. This may disguise a high interest rate. |
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| Personal Loans # 12 |
Look beyond the banks
Get a feel for what's on offer across the wide range of financial providers around these days. Credit unions, building societies, mortgage originators, community banks and boutique online or telephone banks may offer better interest rates or lower fees than the big banks because they are anxious to win new business or they are non-profit organisations. |
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| Personal Loans # 13 |
Try lenders with whom you are a regular customer
Take advantage of the human factor. Being a familiar face may earn you some slack if your credit background is smudged. |
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| Personal Loans # 14 |
Understand what's on offer
Is the interest rate fixed or variable? What up-front, annual or ongoing fees are charged? Check our loan selector to compare loan fees and rates. |
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