Personal loans are on the rise among Aussies. But why?

woman climbing graph of increasing Australian personal loan rates

As we emerge from years of COVID restrictions into an economy hit by rising consumer prices, supply chain issues and inflation, it seems that many Aussies are turning to personal loans to fund their return to normality.

Personal loan lending is hitting a high, according to the Australian Bureau of Statistics (ABS data ). Across all personal loan categories, February and March of this year saw increases only beaten by the March-April-May period of 2016. February 2022 saw $2.295 billion in personal loans, the second-highest lending number recorded in the close-to twenty years of available ABS data.

Perhaps the simplicity and versatility of a personal loan is proving an attractive way to go for many Aussies looking to cover typical costs.

Australian car loans hitting new highs

The recent data also suggests that Australia is experiencing somewhat of a car sales boom. The beginning of 2022 saw notable growth in personal loans taken out for the purchase of road vehicles.

In February 2022, $1.312 billion was loaned for car purchases, approaching the two-decade high of $1.355 billion in March 2016. Although there was a drop in March, it was only slight at $1.284 billion, making it the fourth-highest month on record.

This surge in car loans is a bit surprising, as both the new and used car markets have been dealing with supply issues since the start of the pandemic, leading to high demand and soaring prices.

Further still, Moody Analytics reported that used passenger car prices increased by 18% in the first quarter of 2022. Australians looking to purchase new cars face up to 12-month wait times, so more people are turning to the used market, which is then, in turn, seeing far fewer trade-ins and resales.

A possible contributing factor to the sudden increase in car loans is the terrible flooding that hit Queensland and New South Wales earlier this year. After the unprecedented rainfall, around 22,000 cars were written off, forcing thousands of Australians into the already undersupplied car market.

More Aussies using personal loans for household and personal goods

As inflation has hit the Aussie economy and the cost of everyday items has increased, it seems more people than ever are turning to personal loans to fund big household and personal expenses.

March 2022 saw $136 million in household and personal goods loans, the highest ever for the specific personal loan category.

It seems that consumer borrowing has increased with the cost of living, as people turn to lenders to fund essential purchases, such as household electronics and furniture.

Travel and holiday loans slowly recovering

Borders are open and life is slowly returning to normal. Aussies are shaking the dust off and rekindling their wanderlust. As the winter chill sets in, it’s no wonder folks are jetting off for exotic beach holidays, but how are people paying for them?

It’s likely that many travellers are investing their savings from the COVID-period, or maybe even cashing in some hard-earned credit card rewards points. ABS data shows that the number of Australians turning to personal loans for holidays is on the rise, but still nowhere near pre-pandemic numbers.

February 2020 was the last time that travel loans were maintaining a fairly average rate of $36 million, but it quickly dropped to $2 million by April 2020. We’re seeing some recovery in March this year, hitting a two-year high of $21 million.

Are you considering a personal loan? Head to our personal loans hub for comparisons and guides, and check out the best personal loans in Australia this month for Mozo Experts Choice Award winners and editor’s picks.

Currently, the average interest rate across all unsecured personal loans in the Mozo database is 9.43%, so if you’re wanting a loan to cover immediate expenses, it could be a good idea to look for one with a low interest rate. Check out some top low interest personal loans below.

Top low interest 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 236 personal loans.
Last updated 14 December 2024 Important disclosures and comparison rate warning*
  • 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
    Details
  • 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
    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
    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
    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

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