Choosing The Best Personal Loan

Being in a position of needing money for an unexpected expense may not be the best scenario one would like to be in. But it can happen to anyone, and it can happen to you. When faced with this problem, how are you going to deal with it?The most likely answer to this is “apply for a loan”. Depending on your financial circumstances, and the purpose for which additional funds are needed, there are different types of loan which you can avail from the different banks and non-bank lending firms in Australia.

Probably the easiest and less troublesome type of loan you can consider applying for is the personal loan. For many residents in Australia, a personal loan can be a great way to address their unexpected financial needs. It may be a purchase needed for a business, or it may be a family emergency expense which has not been anticipated. Having said that, how do you choose the best personal loan for your needs? How do you know which type of loan will best address your needs?

Browse through the list below where different types of personal loans are described in order to see which one can best serve your intended purpose.

Types of Personal Loans

Car Loans

If your purpose for borrowing money is to purchase a new car, you may look into this type of personal loan. Most banks and non-bank lending institutions would not require any collateral for this type of loan because the car itself will serve as the lender’s security for the loan. If you are not able to fulfil your loan repayments, the bank or the lending institution can take possession of your car.

Short-Term Payday Loans

This type of loan will best serve borrowers who are employed, with an urgent need for cash but which their wages cannot sustain at one go. The borrower can then negotiate for a short-term payday loan where the amount borrowed can be repaid in say 2-3 months or even weeks. The loan amount plus fees will be automatically debited from your bank account on payday schedules, depending on the term of the loan.

Unsecured Personal Loans

Some borrowers can access additional funds for their other needs like purchases of furniture, or going on a holiday, or to consolidate debt through unsecured personal loans. The criteria for this is simply find the loan provider with the best and competitive interest rates and fees and flexibility in terms of loan repayment conditions.

Fixed Rate Personal Loans

This type of loan is designed for borrowers who don’t want to take risks in terms of fluctuating interest rates. While this type of loan ensures that the interest rate will not increase during the life cycle of the loan, the borrower loses the opportunity to make savings when interest rates go down. But this loan eliminates constant worrying on issues of increasing interest rates because the loan is tied to a fixed rate until the loan is repaid.

Variable Rate Personal Loans

This is the opposite of the fixed rate personal loans because this type of loan has not assigned a fixed interest rate for the loan, but will apply the prevailing market interest rates instead. This means that the loan repayment amounts will vary depending on the increasing or decreasing interest rates.

Compare the Loans

When you have determined the type of loan that best suits your financial needs, the next step you have to take is to compare the different loan products offered in terms of the best interest rate, the most flexible repayment terms, the longer loan term with option for early repayment without any additional cost to the borrower.

In order to know that you are choosing the right loan facility, you should consider your financial circumstances, your capacity to repay and the urgency of the need for additional finance from external sources. Ending up with the wrong loan type could burden you with accumulating interest rates and inflexible loan terms.

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