Personal loans

A personal loan is an amount of money you might borrow to pay for a major life expense such as a car, holiday, or home renovation. It can also be used to consolidate existing debt.

If approved for a personal loan, you will need to repay the money with interest over an agreed timeframe, which is usually between one and seven years. Repayments are generally made weekly, fortnightly, or monthly.

The interest rate you receive depends on whether you take out a secured or unsecured personal loan. It may also be influenced by your credit score.

A secured loan is 'secured' against the asset you are borrowing for such as a car, or home. If you are unable to repay the loan, the lender can sell the asset to cover the costs of the loan. Most secured personal loans have a lower interest rate when compared to an unsecured personal loan because there is an asset attached.

An unsecured personal loan is a loan that does not require an asset as security. Your income and ability to repay the loan is still assessed, however you don't need an asset to secure the loan.

If you’re buying a car or motorbike under seven years old, a Great Southern Bank Secured Fixed Car Loan may be right for you.

For vehicles older than seven years, Unsecured Fixed Personal Loan are available.

A personalised interest rate is an interest rate based on an assessment of your credit score. If you have an excellent credit score and a good history of repaying loans, credit cards and other bills, you’ll likely be offered a lower interest rate.

When you apply for a personal loan, your individual situation and credit score will be considered when calculating your personalised interest rate.

Knowing your credit score will help you estimate your personalised interest rate. It’s also another way to get clever with your finances.

Checking your own credit report won’t hurt your scores. Some credit reporting agencies have a limit on the number of free credit checks you can make within a certain period of time. Don’t forget to ask before you apply.

Credit scores are calculated by looking at various aspects of your credit history and profile. These can include details of any previous applications you’ve made for credit (whether successful or not), details of credit or loan products you have held in the past, your repayment history, any overdue accounts you might have, and information about any court judgements against you.

These are added together to give an overall picture of your ability to repay a loan.

As you might imagine, someone who has never defaulted on a loan will be considered a lower risk than someone with a history of missed repayments, court judgements, or bankruptcy.

Similarly, the more applications for credit on your record, the lower your score is likely to be.

Other factors which can negatively impact a credit score include a history of using ‘payday lenders’ and having open accounts with debt collection agencies.

You’re entitled to a free copy of your credit report every three months from a Credit Rating Bureau (CRB). The CRB must provide the report within 10 days of your request.

The three main Credit Rating Bureaus in Australia are:

• Equifax (previously known as Veda)
• Experian Australia Credit Services
• illion (formerly Dun & Bradstreet)

Each time you apply for a loan, a record is made on your credit report. Although this may result in a temporary dip to your credit score, it will recover as long as you stay on top of your current repayments and keep future loan applications to a minimum.

It’s important to avoid submitting multiple loan applications within a short space of time, as this will most likely lead to a decline in your credit score.

The rate you are offered is calculated on your personal circumstances and credit history. A few different factors are considered, including:

• Your credit score
• Information provided in your application
• Existing loans
• The loan amount and your perceived ability to repay the loan.