Aussies no longer want personal loans and this could be the reason why

By Ceyda Erem · · 3 min read
Fact Checked
Advertiser disclosure

Recent RBA data has revealed that the total value of personal loans Aussies have been borrowing has sunken to their lowest levels since 2015 by $4.8 billion. 

The data also found that personal loans were the second type of consumer lending to slip - credit cards have also taken a dive, with 810,000 fewer accounts held since January 2018. 

According to Mozo Banking Expert, Peter Marshall, the sudden cold shoulder given toward personal loans could be due to a lack of trust, on both sides of the equation. 

“Since the Banking Royal Commission, lenders have become more cautious with who they lend to, which could explain the decline in personal loans,” said Marshall. 

“On the other hand it could also be due to a cultural shift away from debt, as more and more Australians are working to purchase big ticket items by saving up for them.” 

Some of the most common uses for a personal loan include a new car, holiday, wedding or renovation, but they can also be used to consolidate debt. 

They also make for a more effective way to pay for larger expenses, when compared to a credit card says Marshall. 

“Unlike a credit card, a personal loan typically comes with a lower interest rate, and some have repayment options which can help you pay the loan off faster and save on interest,” said Marshall. 

“The trick to getting it right is finding the loan that best suits your needs, it’s more than just having a great rate.” 

So with that in mind, we thought it was worth having a quick recap on what Aussies should be looking for when it comes to choosing the right personal loan. 

Choose the right interest rate 

When it comes to personal loans, there are two types of interest rates to choose from: fixed and variable. A fixed interest rate means your repayment amount won’t change over the life of the loan, since your interest rate is ‘locked in’, while a variable rate has the power to change in accordance with the market. 

Secured vs unsecured 

Just like interest rates, there are two types of personal loans: secured and unsecured. With a secured personal loan, you’ll need to provide some type of security to be used as collateral. This could be your car or another asset you own. While this may sound a little daunting, keep in mind there a generally lower rates with secured personal loans and you wouldn’t lose the asset unless you were unable to make repayments.  

On the other hand, an unsecured personal loan means that you don’t have to offer any security, but you may be given a higher interest rate. 

Repayment features 

You may also have a few loan features attached to your personal loan, like an extra repayment or redraw facility. With an extra repayment option, you’ll be able to make additional repayments on your loan, which can help you save on interest and help you get out of debt sooner. Just keep in mind that you may be charged a fee to do this. A redraw facility then allows you to withdraw any of these extra repayments if you ever need quick cash for an unexpected expense. 

Watch out for fees 

Just like any financial product, there are a few fees that might come with taking out a personal loan. Application or service fees are some of the most common fees you may encounter when you start shopping around for personal loans. Other fees may include late payment or exit fees.

Think a personal loan could be the right choice for you? Head on over to our personal loan comparison tool or get started with some offers below. 

Compare personal loans

Mozo may receive payment if you click products on our site. We don’t compare the entire market, but you can search our database of 234 personal loans.
Last updated 24 November 2024 Important disclosures and comparison rate warning*
  • Low Rate Personal Loan

    Excellent Credit, $5,000 - $75,000

    interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.to 8.39% p.a.
    7.19% p.a.to 8.75% p.a.based on $30,000
    over 5 years

    Competitive low rates for borrowers with excellent credit on 1-7 year loans from $5,000 up to $75,000, plus free extra repayments. Winner of Mozo's Experts Choice Excellent Credit Unsecured Personal Loan 2024 and Excellent Credit Secured Personal Loan 2024 awards ^. Min. income of 25k after tax, to apply.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

    Compare
    Go to site
    Details
  • Unsecured Personal Loan

    Fixed

    interest rate
    comparison rate
    Monthly repayment
    6.75% p.a.to 26.95% p.a.
    6.75% p.a.to 26.95% p.a.based on $30,000
    over 5 years

    Borrow up to $50,000 unsecured. Perfect if you earn more than $22,100 p.a. and have good to excellent credit. Multi-year winner of Mozo’s Experts Choice Unsecured Personal Loan Award, 2021, 2022, 2023 & 2024^'

    Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 6.75% would cost $35,430.23 including fees.

    Compare
    Go to site
    Details
  • Debt Consolidation Loan

    $5,000-$75,000

    interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.to 18.99% p.a.
    7.19% p.a.to 19.39% p.a.based on $30,000
    over 5 years

    Competitive fixed rates on loans up to $75,000 depending on your credit score. Zero monthly account keeping fees, no exit fees and no early repayment fees. Make weekly, fortnightly or monthly repayments, over 1 to 7 years managed entirely online, at any time. Fast and easy, 100% online application.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

    Compare
    Go to site
    Details
  • Unsecured Personal Loan

    interest rate
    comparison rate
    Monthly repayment
    6.56% p.a.to 21.99% p.a.
    6.56% p.a.to 22.79% p.a.based on $30,000
    over 5 years

    Competitive fixed rates for borrowers on 1-7 year loans from $5,000 up to $50,000. $0 monthly fees and no early repayment fees to pay. Fast application process on the Revolut app. According to Revolut and subject to loan approval, you'll receive your money into your Revolut account straight away.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.56% would cost $35,768.68 including fees.

    Compare
    Go to site
    Details
  • Express Personal Loan

    Secured

    interest rate
    comparison rate
    Monthly repayment
    16.95% p.a.to 29.95% p.a.
    32.99% p.a.to 45.5% p.a.based on $10,000
    over 3 years

    Access fast finance on loans from $3,000 to $25,000 with a Jacaranda Finance Personal Loan. Terms from 25-36 months. Check if you qualify with no impact on your credit score. Enjoy a speedy, online approval.

    Repayment terms from 2 years to 3 years. Representative example: a 3 year $10,000 loan at 16.95% would cost $14,952.03 including fees.

    Compare
    Go to site
    Details
  • Secured Personal Loan

    $5,000-$75,000

    interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.to 18.99% p.a.
    7.19% p.a.to 19.39% p.a.based on $30,000
    over 5 years

    Get a secured personal loan with competitive low rates for borrowers with excellent credit. A simple fixed interest rate that can be repaid weekly, fortnightly or monthly, over 1 to 7 years (10 years for Green Loans). Managed entirely online, at any time. No monthly account keeping fees, no exit fees and no early repayment fees. Quick and easy, 100% online application. Establishment fees apply.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

    Compare
    Go to site
    Details

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

^See information about the Mozo Experts Choice Personal Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Compare personal loans