MYTH 2. Banks are the only trustworthy lenders
“The big banks would probably like you to believe this one! But the truth is, there are a wide variety of trustworthy lenders out there, and often the best interest rates are found outside traditional banks,” says Lamont.
In Australia, any credit provider - including banks, mutuals, credit unions, peer-to-peer lenders and online fintech platforms - must be registered and regulated by ASIC. Under these regulations, the lender must practice responsible lending, which includes ensuring the loan you apply for is suitable for you and your financial situation.
MYTH 3. Applying for a personal loan hurts your credit score
Simply putting in an application for a personal loan shouldn’t impact your credit history at all, since at that point, you don’t actually have access to any credit. In fact, applying for a personal loan and then meeting your repayments faithfully is one way to start building up a positive credit report.
One thing that can send up a red flag is applying for multiple personal loans all at once, which is why it’s a good idea to compare your options first and then only put in an application for your top choices.
MYTH 4. Personal loan interest rates are unfairly high
Nobody wants to get stuck paying a heap of interest - the good news is, there are heaps of personal loans on the market with really competitive interest rates.
This myth might spring from the fact that personal loan rates are 5.32% higher than home loan rates on average. This is because personal loans are repaid over a much shorter timeframe than a mortgage. But look at it this way - the average personal loan rate is 7.43% lower than your typical credit card rate!*
To score a great rate on your personal loan, all you need to do is know where to look. To get you started, you can check out some super competitive personal loans in our comparison table.
*Based on average rate for P&I $300,000 home loan over 30 years with 80 LVR(4.35%), and average rate for $30,000 personal loan over 5 years (9.67%) and average credit card rate of 17.10%.