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Personal Loan Guide

Your Complete Guide To Personal Loans

Discover the ultimate guide to personal loans in Australia, compare loan types and see which option is best for you.
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12 min Read
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Updated on
Feb 20, 2021
Sometimes, you need a helping hand to get you to the next stage of your life. Whether you’re buying a new car, remortgaging your home or taking that first step on the property ladder, a personal loan can help you get there faster. But which loan is right for you? Is taking out a loan the right course of action? Discover our complete guide to personal loans in Australia, compare loan types and see which option is best for your needs today.

Table of contents

What Is a personal loan?
Key Factors to Consider
Personal Loan Types
Secured vs. Unsecured Loans
Benefits & Drawbacks
Documents Needed
Common rejection reasons
Tips for approval

What is a personal loan?

A personal loan is a lump sum payment of between $2,000 to $100,000 that is repaid over a term of up to seven years. The loan amount and repayment options are then agreed upon by you and the lender. A personal loan can be secured or unsecured, and used for a variety of purposes, from buying a new car to buying your first home.

Key Factors to Consider before Applying

Before you take out a personal loan it’s important to consider your reasons for needing the loan. Perhaps you are making renovations to your current home, buying a new home or consolidating your debts to manage your monthly outgoings.
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How much are you looking to borrow?

If you’re looking to borrow a smaller amount under $2,000 you might want to consider an overdraft or a short term loan rather than a personal loan.
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Do you have a bad credit rating?

When applying for a loan your lender will perform a credit check on you before taking your application further. A bad credit score can mean high risk, which can mean higher interest on your loan, so if you know you have a bad credit score you may be better off looking at loans from short term lenders. Use our Repayment Calculator to get a better idea of your rate in seconds!
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Do you have any equity you can use as security?

Secured loans offer lower interest rates, as they are lower risk. If you have assets you can use as security you can benefit from a lower rate overall with a secured loan.
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Do you need one lump sum, or will you need more funds during the loan term?

If you need to access funds more than once over a longer period you may want to choose a personal line of credit or overdraft.

What Personal Loan Types are Available?

Choosing the right type of personal loan for you can save you a lot of money on interest repayments in the long run. There are a few standard types of personal loans you can choose from, including:
1

Unsecured Loans

An unsecured personal loan is one where the lender requires no security on the debt.  This means your loan is not backed by any personal collateral, such as home equity or a line of credit. Unsecured loan types offer a more flexible option for borrowers, however interest rates on these loan types are usually higher as they are more financially risky than a secured personal loan. You may also need to provide a guarantor to say that your repayments will be made, though this is not normally required.
2

Secured Loans

A secured loan is a personal loan that requires you to provide security on the loan amount. In this case, the person taking out the loan uses an asset they own as security, usually your home or car, or in some cases the asset you are purchasing with the loan. The lender then has the authority to repossess your assets in the event of missed payment to cover the cost of your debt. These loan types are more likely to have lower interest rates as they are less financially risky for lenders.
3

Variable Loans

A variable-rate personal loan is a flexible loan with varying monthly repayments. Interest rates can fluctuate at the lender’s discretion, which can cause your repayment amount to increase or decrease. If rates decrease, your repayment amount will decrease and vice versa. These loan types tend to be more likely to offer features and benefits which could suit your situation, however they can be harder to budget for on a month-to-month basis.
4

Fixed Loans

The opposite of variable loans, fixed loans charge a fixed interest rate for the full term of the loan, making it easier for you to manage your repayments. The only real downside to a fixed loan is if interest rates drop, you won’t see the benefit and may be paying more.
5

Overdraft

An overdraft is a type of emergency personal loan, where you are granted a specific amount of money to go “overdrawn” on your account balance. These are simple to set up and a convenient way to cover any financial emergencies or expected payments leaving your account. You only pay interest on what you use throughout the month, however, there are usually caps on how much you can borrow, and interest rates are usually higher than a personal loan.
6

Line of Credit

A line of credit a pre-agreed borrowing limit that can be used at any time, offering flexible access to funds as and when you need them. These kinds of loans work similarly to a credit card and are good for making multiple smaller purchases that can be repaid quickly.
“A fixed rate loan is a good option in terms of stability, you will find it easier to budget as you know exactly how much you are paying for your loan each month.”
SocietyOne CEO Mark Jones

Secured vs. Unsecured Loans

There are 3 primary points of difference between these two personal loan types:

Secured
Unsecured
Asset Requirement
Backed by an asset you own, such as your home or car
Require no security to set up
Variances in Interest Rate
Lower interest rates
Higher interest rates
Restrictions on Loan Usage
Some restrictions
Little to no restrictions

Use our loan calculator to get your free personalised rate

Calculate My Rate

Benefits & Drawbacks of Personal Loans

There are a number of advantages and disadvantage to taking out a personal loan, most of which will be relevant to your personal situation. Take some time to consider your reasons for taking out the loan and assess how the loan will benefit you in the long term. Check out the information below for some general personal loans pros and cons.

Advantages

Disadvantages

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Consolidate existing debt
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Purchase big-ticket items now and pay off the full amount in smaller instalments
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You can borrow any amount up to $100,000
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Longer repayment period
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Transferring of debt rather than just paying off what you owe
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Not meeting the monthly repayments will increase fees and interest

Did you know?

Personal loans offered by SocietyOne are free of hidden fees or monthly costs and also don’t penalise you for being proactive by not charging early repayment fees.

What Documents are Needed to Apply for a Loan?

In order to apply for a loan, there are some personal documents you will need to share with your lender. Most financial institutions will have their own application criteria, but in general, you will need the following documentation to finalise your loan application.

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Proof of identification

This can come in the form of a driver’s licence, proof of age card, passport or Medicare card. You may also be asked to provide a utility bill showing your current address.

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Proof of income

In order to verify your income, you may need to provide recent payslips, proof of bank statements and two years of tax returns if you’re self-employed.

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Statements from other loan accounts/credit cards

Your lender will ask you to provide information on any other loans or credit cards you have open before you set up your personal loan.

If you’re applying for a car loan you will also need to provide:

• VIN or chassis number, engine number and registration plate details
• Car dealer information or the contact details of who sold you the car
• Tax invoice and receipt for the car or purchase price if a private sale
• Your CTP insurance and comprehensive insurance details

couple researching loans

Common Reasons for Personal Loan Application Rejections

Getting rejected for a personal loan can be disheartening, especially when you’re in a tight spot and in need of the money. You can feel lost, and unsure of why they would reject you. There are a variety of reasons your loan application may get rejected, ranging from your employment history to the reason you need a loan in the first place.

Read on to discover the most common reasons personal loan applications are rejected to get an idea of your own eligibility and tips for getting your application approved.
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Bad credit history

There are a number of factors that can give you a bad credit score, even if you have never defaulted on a loan payment before. Things like late payments and applying for lots of different loans over a short period of time can give you a bad credit rating. Have an idea of your rating before you apply by requesting a copy of your credit report or getting a credit score check.
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Low income

Your lender is going to be looking at your application and thinking, “Does this person have the means to make the monthly repayments on this loan?”. Lenders cannot approve applications that can’t be paid back, so this will play a huge factor in the decision-making process.
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Unstable employment history or non-existent employment history

In relation to the above, lenders will check your employment history, and whether your job is stable enough to keep up with monthly repayments.
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Incorrect personal details

Lenders are looking to verify your details in order to grant you the loan, so any inconsistencies here will be flagged and they might reject you.
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Credibility of loan purpose

Check you can finance what you need with the loan you are making an application for. Many loans come with restrictions on how the funds can be used, for example, secured loans can only be used on certain assets.
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Low-value equity

Many lenders have restrictions on what assets you can use as equity against your loan, so if your assets don’t make the cut you could be rejected.
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Amount of loans already open

If you already have several personal loans open the lender could reject you as high risk.

Tips for getting your application approved

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Understand your eligibility

Make sure that you understand the requirements of the loan you are applying for.
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Double-check your personal details

It seems simple, but ensure that the details you provide are correct so that there is no reason for your application to be rejected. Providing any incorrect information or submitting a part-filled out application can lead to rejection.
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Check that your equity meets requirements

Ensure that your collateral meets the requirements of the loan you’re applying for.
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Take a look at your loan portfolio

Don’t hold more loans than you can afford, as your lender might not think you’ll be able to pay it back. If you have other loans, you can look into consolidating this into one loan or paying back some of the loans before you apply for new ones.
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Check the credit requirements

Understand what level of credit you will need for your loan application to be successful and see if you meet them. If you’re unsure, ask your lender before you apply.
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Check your loan purpose is allowed

Discuss your loan purpose with your lender to see if it suits the loan you are applying for. Secured loans will have more restrictions.
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Ensure you meet employment requirements

Check whether you need to have been in your job position for a certain amount of time, or how regularly you need to show income is coming in before you apply.
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Find out the min. income requirements

Different lenders will have different income requirements, and this can change subject to the loan you are applying for.
“A great idea is to check your credit score and make sure you meet all of our eligibility requirements before applying. That way you may avoid being rejected.”
SocietyOne CEO Mark Jones

Frequently Asked Questions

Things to Consider Before Getting a Personal Loan

Eligibility criteria for personal loans

If you’re thinking of applying for a personal loan from SocietyOne, there are a few key criteria that you’ll need 
to meet to be eligible:

  • You need to be at least 21 years of age
  • Be an Australian citizen or a permanent resident of Australia
  • You must earn more than $30,000 per annum, with Centrelink considered to be a supplementary form of income
  • It’s important that you have a good credit score

What will I need to get a personal loan?

You may need to supply us with the following 
information and documents as part of your personal 
loan application:

  • Your personal details – name, address, date of birth
  • A driver’s licence or passport
  • Proof of your address - for example, a utility bill
  • Proof of your income in the form of payslips or bank statements
  • Details about your day-to-day expenses, and any other debts

Who can apply for a SocietyOne personal loan?

You are eligible for a SocietyOne personal loan if you:

  • Be at least 21 yrs old
  • Earn more than $30,000 p.a. from employment (Centrelink may be used as supplementary income)
  • Be an Australian citizen or permanent resident
  • Have good credit
  • Be using the loan mainly for personal use

What is the process of applying for a personal loan?

  1. Get your rate: In as little as 1 minute we'll give you a rate based on your credit history
  2. Apply online: Most people finish their application within 5 minutes (and it's easier to do if you're enjoying your morning coffee)
  3. Get paid: Once approved, we'll have the funds in your account in a few days‍

Get your rate now and get started.

How much can I borrow, and for how long?

SocietyOne's unsecured personal loans range from $5,000 to $50,000 with flexible loan terms of 2, 3 or 5 years.

I've forgotten my password

Please contact customer service at customer.service@societyone.com.au and they will arrange for the I.T department to retrieve the answers for you.

What are the interest rates?

Fixed interest rate

‍Your interest rate doesn't change during the life of your personal loan - it is a fixed rate. Thanks to the fixed interest rate, your regular repayments are always the same, making it easier to budget.

Fixed rates from 6.99% p.a*

‍

Comparison rate

This takes into account the interest rate plus standard fees and charges, making it easier to understand the complete cost of the personal loan and compare products.

Comparison rates from 6.99% p.a*

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Have some more questions?

Our support team is here to help.

Ready to apply for a personal loan?

Get My Rate
Personal loans - credit score - SocietyOne
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‍Information about SocietyOne borrowing rates
The rate advertised above is a comparison rate. See below for further information about comparison rates. Tier 1 borrowers will receive an interest rate between 5.95% - 10.49% p.a. (comparison rate 5.95% - 12.83% p.a.). Tier 2 borrowers will receive an interest rate between 9.99% -12.19% p.a. (comparison rate 12.05% - 15.03% p.a.). Tier 3 borrowers will receive an interest rate between 11.99% - 14.99% p.a. (comparison rate 14.37% - 17.59% p.a.). Tier 4 borrowers will receive an interest rate between 14.99% - 19.99% p.a. (comparison rate 18.41% - 21.70% p.a.). Maximum interest rate is 19.99% p.a. (comparison rate 21.70% p.a.). An establishment fee applies for most borrowers. Loan example: for a borrower with excellent credit (Tier 1 borrower), a loan of $10,000 over a 3 year term, with an interest rate of 8.99% p.a. (comparison rate 12.32% p.a.) and a $495 establishment fee, the fortnightly repayment would be $154 and the total cost over the life of the loan (including the establishment fee) would be $12,013. SocietyOne personal loans are available for terms of 2, 3 and 5 years. Minimum loan repayment period is 2 years, maximum loan repayment period is 5 years.

Information about comparison rates
Comparison rates are designed to allow borrowers to understand the true cost of a loan by taking into account fees and charges, the loan amount and the term of the loan.  The SocietyOne comparison rate is based on an unsecured fixed rate personal loan of $10,000 over 3 years.  WARNING: Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.

Information about bank comparison table
All rates in the bank comparison table are based on an unsecured fixed rate personal loan of $10,000 over 3 years. The SocietyOne rate is the lowest available rate for a borrower with excellent credit (Tier 1 borrower).  See above for more information about SocietyOne borrowing rates.  The comparison table does not take into account short term bank promotional rates.

Canstar 5-star Rating was awarded on 7th of November 2019 for the Unsecured Loan – Excellent Credit Product for the Unsecured Personal Loan profile.

SocietyOne Australia Pty Limited ACN 151 627 977 holds Australian credit licence no. 423660. Credit is subject to SocietyOne’s standard terms and conditions and lending criteria. Credit scores provided by SocietyOne Services Pty Ltd ACN 609 495 409.

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