There are instances where people might need vast amounts of money for personal reasons. However, many lenders offer to lend lump sum amounts of money per their terms and conditions. Also called personal loans, these deals have taken on many types. But which personal loan types can people apply for in Australia? Here are some ideas.
1. Secured Loan
If people have a vehicle, real estate property, or other assets that they can put up as collateral for the loan, they might be able to apply for a secured loan. By putting up the collateral, lenders will assess the collateral and loan the money based on the amount of the collateral.
The interest rates are usually lower because the collateral serves as security for the loan. If people default on the loan, the lender can claim the collateral as compensation. But people should note that they might lose the asset they put up as collateral if they default on the loan.
2. Unsecured Loan
An unsecured loan is a loan that doesn’t require collateral. These loans are also referred to as signature loans or personal loans. Though unsecured loans are a bit difficult to get and they have higher interest rates, they don’t put people at the risk of losing an asset. For an unsecured loan, people get a certain amount of time to repay the money with interest. People usually get unsecured loans for small purchases or one-time purchases.
3. Student Loan
Students take student loans to pay their tuition fees, books, and other materials. Students can take these loans from the government or private institutions. Private student loans have higher interest rates and are given to students with good credit scores. Students who don’t have a good credit score can get these loans from the government. Student loans must be paid back with interest and can be forgiven if the student can’t pay them back.
4. Overdraft or Line of Credit
An overdraft is when you spend more money than you have in your bank account. It can happen if you write a check for more money than you have in your account or use your debit card to make a purchase when you don’t have enough money in your account. Overdrafts can be expensive because the bank will charge you fees for using more money than you have.
A line of credit is a loan that you can use when you need it. You can borrow up to a certain amount of money and only have to pay interest on the money that you borrow. Lines of credit can be helpful if you need cash for an emergency or want to make a large purchase.
5. Consolidated Loans
Consolidated loans are loans that you get to pay off other loans. It can be helpful if you have multiple loans with different interest rates. By consolidating your loans, you can have one loan with one interest rate, helping you save on interest and making it easier to pay off your loans. If you have multiple debts, you may be able to consolidate your loans into one, which can make your payments more manageable and may help you save on interest.
There are many reasons why you may want to apply for personal loans. It can be helpful if you have a significant expense that you need to pay or multiple debts that you want to consolidate into one. If you are approved for a personal loan, you can use the money to pay for anything you need, like a car, a house, or anything else you may need.
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