Personal loan applications soar by 12.4% in December
Australian credit applications have surged in the December quarter, with a particularly high increase in personal loan applications, according to new data from Veda.
Overall, credit applications were up by 7.7% from the December 2015 quarter. Credit card applications saw a 3.0% growth, mortgage applications rose by 6.6% and personal loans, by far the category with the biggest increase, rose by 12.4%.
According to Veda, growth was much stronger than expected, even in areas where the economy is slowing, such as Western Australia and the Northern Territory.
Increased personal loan applications were seen across the country, with New South Wales and the Northern Territory leading the pack, and South Australia trailing at the back.
Car loans, were a notable exception to the trend, dropping from 8.0% to 4.5%.
The strong growth numbers came from new products and offers on the personal loan market. These new products are mainly from online lending platforms, often known as peer-to-peer lenders. With no brick and mortar stores to support peer-to-peer lenders are often able to offer Aussie borrowers much more competitive rates on personal loans than the big banks.
Veda’s General Manager of Consumer Risk, Angus Luffman, said the pickup was a positive sign for Aussie borrowing and spending, despite low consumer sentiment and retail sales growth.
He said that while personal loan applications were increasing, “...the total debt outstanding on other personal credit, excluding housing, has consistently fallen since the start of 2016, down by 1.2% for the year to November.”
The difference between rising personal loan applications and falling debt, Luffman said, suggests that “consumers are being circumspect about taking on additional credit. Instead, they are taking advantage of the increased product options on offer to meet their needs.”
Tips for finding the perfect personal loan
- Check the comparison rate. The comparison rate is designed to show the “true cost” of a loan, including interest and fees, so it’s a valuable indication of whether a loan is a good deal or not.
- Consider securing your loan. Generally speaking, if you offer up an asset, like a property, car or other valuable item, as collateral against your loan, you’ll be able to snag a better interest rate.
- Beware sneaky fees. Make sure you’re aware of any upfront application or ongoing service fees you’ll be charged, but make sure you also consider things like late payment fees and, if you opt for a fixed rate loan, breakcost fees when choosing a loan.
- Borrow within your means. Don’t stretch your budget too thin! Use our personal loan repayments calculator to work out how much you’d need to repay each month, and make sure you can comfortably fit it into your budget.
Looking for a personal loan to kick off a new project in 2017? Whether you’re renovating, going away on holiday or finally scoring a fishing boat, find a loan to fund your goals with our personal loan comparison table.