Revealed: New figures show Australians choosing personal loans over credit cards
Australian consumer credit applications have continued their steady rise in the March quarter, with new data showing a 4.6% increase since March 2016 which is largely being fuelled by growth in personal loans.
Equifax’s (formerly Veda) latest quarterly consumer credit report revealed the increasing disparity between credit card and personal loan applications, with Aussies appearing to be moving away from credit cards as a means of paying for larger purchases.
The report showed that credit card applications fell by 3.8% in the 2017 March quarter compared to 2016, while personal loans applications continued their significant growth - up by 13.5% on this time last year.
Personal loans applications proved to have increased the most in South Australia (up 14.3%) and Tasmania (up 14.1%), while credit card applications fell across across the country with Western Australia (down 12.3%) and Victoria (down 9.9%) recording the biggest drops.
Angus Luffman, Senior GM Consumers Products at Equifax, noted that growth in personal loans was being driven by consumer willingness to pay for their purchases using non-conventional methods and a desire for greater online access which was being provided by challenger lenders.
“The data shows that consumers are adapting to different payment options at the point of sale,” he said.
“While credit cards are being used more for everyday transactions, it is likely consumers are funding a greater number of higher value household purchases through personal loans.”
According to Mozo data, the lowest personal loan available is Community First Credit Union's variable 5.34% (comparison rate 6.11%) New Car Loan. This compares to the Police Credit Union’s SoLo Credit Card, which is the lowest on the market, with a purchase rate of 6.99%.
Are you looking for an alternative way to finance your next holiday or perhaps some renovations on your home? A personal loan might be the right option for you, so make sure you head on over to the Mozo personal loan hub to compare 186 loans from 43 different lenders.
* 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.
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