Personal loans on the up ahead of Christmas
Article by Ben Tosi
Aussies are racking up personal loan bills that now total close to $6.4 billion across the country, according to the ABS’ recently released Lending Finance data for the month of October.
Despite our personal loan bills falling from last year, they increased by 1.3% from the previous month while all other forms of lending, whether it be for a commercial business or your own home, fell.
As a seasonal trend, this statistic shows the willingness of Aussies to redirect their financial priorities ahead of the holiday period.
“For many households, turning to loans or credit cards may seem the only option to cover the cost of Christmas, but choosing the wrong way to pay can add 25% to the cost. If you’re financially unprepared, there are alternatives,” said Mozo Director Kirsty Lamont.
Aussies looking towards a personal loan to cover their Chrissy or holiday period could end up paying a truckload more interest than necessary, depending on the type they opt for.
“While quick and easy money might seem like an easy solution, Aussies should avoid short term cash loans like a photocopier at the Christmas party. The decision will feel highly regrettable when you realise it’s cost you three times as much as the average credit card or unsecured personal loan,” said Lamont.
Last month, Mozo crunched the data on a $3,744 Christmas or holiday haul* and found that Aussies who opted for a short term cash loan at an interest rate of 47.62% would rack up $934 in fees and interests - compared to just $300 at the average unsecured personal loan rate of 11.74%.
But even more competitive rates are currently available on the market.
According to the Mozo database, the leading interest rate for an unsecured personal loan is from Ratesetter who currently offer a 4.20% interest rate for customers with an excellent credit rating but others such as Police Bank offer rates as low as 7.20% for customers without a good or excellent credit score.
To nab yourself a personal loan ahead of the holiday season, check out Mozo’s comparison tables where you can find great options from major banks and peer-to-peer lenders, or check out our three step system to a killer personal loan below.
How to get your personal loan sorted ASAP
- Step 1 - Compare personal loans: You can kick start your personal loan comparison with Mozo's personal loan search tool or if you're a refinancer you can use our Switch & Save Calculator.
- Step 2 - Make your shortlist: Once you've punched in your numbers, our personal loan calculators will show you the loans best suited to your situation in one table. If you're struggling to decide between two loans, you can compare them side by side using our personal loan comparison calculator.
- Step 3 - Start your personal loan application: When you've picked the winner, the blue 'go to site' button will take you to the provider's application website and you can apply for the loan from the comfort of your own home.
*Calculations were based on borrowing $3,744 and making equal monthly repayments to repay the full amount over a six-month period at the relevant interest rate for each product type.