A personal loan is a great option when you need just that little bit more cash for renovating, buying a new car, or finally taking that big holiday overseas youve been thinking about for years.
But personal loans can also be used to consolidate your debts and help you get your finances back in shape.
Here are few things to pay a bit of attention to when you are weighing up the loans on offer.
Interest Rate
Personal loans can be fixed or variable rate and rates for our current top loans range from 9.99% to 14.99% per annum giving you a good idea of the kind of rate you should expect to be paying.
Fixed loans will give you the security of knowing how much you are paying every month but if the bank drops their loan rates you might be stuck paying more, of course if rates go up you're protected.
If the loan is short term and economic conditions suggest that interest rates are more likely to go down rather than up then a variable rate loan is probably your best option.
Loan amount
With a couple of exceptions there's often a minimum amount you need to borrow, usually $5000. If $5000 is more than you need then think twice about taking out one of these loans or look around for those exceptions.
Theres nothing like a bit of extra cash in the bank to tempt you to overspend when you cant really afford it.
Duration
How long you take the loan out for might impact on a number of things including the interest rate you think you can afford, how much you are going to borrow and whether you go for a fixed or variable rate loan.
One year is usually the minimum loan term, for a longer term loan of 3 to 5 years be realistic about how much you can afford and the likelihood of potential changes to your ability to repay.
Payment options
Look for flexible repayment terms but be careful of anything that is too flexible.
The ability to make extra repayments without being charged a fee is a great, but the ability to redraw any repayments might be too tempting and suddenly that loan you were going to pay off in one year has stretched out to three.
Fixed rate loans generally charge fees for extra repayments.
Fees
Set up and annual fees can be as little as zero or as much as $250.
Check when you are comparing loans to see whether savings on a low interest rate are wiped out by the higher fees.
Other options
Like a lot of financial products these days personal loans come with options like insurance against your future inability to repay.
Some banks also offer a discount on the interest rate if you take out a loan protection policy, but do your sums to see if the added cost is worth it.