With an unsecured personal loan you're borrowing money without putting up an asset (like a car) as security.
If you can't repay the loan there's nothing your lender can repossess and sell to recover your debt. Unsecured personal loans have slightly higher interest rates to compensate for the higher risk the lender is taking. They are typically easier to get than secured loans and rates can still be competitive.
With an unsecured loan you can borrow anywhere between $2,001 and $100,000 and terms range from 1 to 7 years.
Unsecured personal loans aren't tied to specific purposes in the way a home loan or a secured car loan is. They're quite flexible, and most lenders don't impose any restrictions on how you use the funds.
You can use an unsecured personal loan to:
Any money you borrow comes with risk if you can't repay it. The best way to minimise any risks that come a loan is to:
Borrowing a lot of money is riskier than a small amount, generally speaking. A 5% interest on a small loan won't cost you as much in interest charges as the same rate on a much bigger loan.
Here's a simple example.
| Loan A | Loan B | |
|---|---|---|
| Interest rate | 12% | 12% |
| Loan term | 3 years | 3 years |
| Loan amount | $3,000 | $8,000 |
| Total loan cost (loan plus interest) | $3,588 | $9,566 |
These loans are otherwise identical, but the higher loan amount ends up costing the borrower more than $1,500 in interest. Whereas the smaller loan is just $588 of interest.
You might think that getting a very small unsecured personal loan is less risky. But if you want to borrow less than $2,000 you probably can't get a personal loan.
Borrowing under $2,000 means you're probably looking at a payday loan. These loans don't have standard interest charges, but come with hefty fees. The price of a small, fast unsecured loan can actually be much higher.
Applying for any loan impacts your credit score temporarily. That's why you should only apply for one product at a time and try to avoid getting your application rejected.
Aside from the initial impact of the application, taking out an unsecured personal loan won't necessarily hurt your credit score. If you make regular repayments and never miss one this will probably benefit your credit score.
Having multiple loans at the same time may hurt your credit score. And debts like credit cards or personal loans can have a bigger impact than something like a home loan.
Button link: Tips to improve your credit score
Unsecured personal loans are offered both by large, traditional banks such as NAB, and non-bank lenders like OMM or Harmoney. Non-banks are governed by the same regulations as banks, so both are safe and secure options for your borrowing needs.
The key difference between a bank and a non-bank is that non-banks hold a credit licence and not a banking licence. This means that they cannot provide some banking services, such as taking deposits. If you prefer to do all your banking in the same place, you may want to stick to the banks.
Typically, non-banks offer more competitive rates, with lower set-up and ongoing fees. However, they may have fewer loan options compared to traditional banks. Non-banks can also be more flexible and may provide better, personalised service when compared to traditional banks.
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Of all of CUA’s personal loans which ones can be used as an unsecured personal loan for ~$55000
Hi LM,
Thank you for you inquiry.
Unfortunately, there is no available unsecured loan from CUA. Thankfully, there is a list of unsecured personal loans featured on this page. Please go ahead and check them. You might find the right one for you through that page.
I hope this information has helped.
Cheers,
Harold
Hello
What will be the best loan option if I am looking at buying an overseas (Subcontinent) property. I am looking at around $150,000. I have a good paying job where I am making more than $10,000 pre-tax a month.
Hi Frank,
Thanks for your question.
If you’re looking for a personal loan, I’m afraid that these lenders featured on our site offer loans to Australian markets only and the maximum amount they can lend would be at $50K. Higher than that amount would generally be risky to most lenders. Usually, if you’re to purchase a property, the option you would have is to take a home loan, but again, the banks/lenders would only service the people in Australia and the properties would also be in the country.
Regards,
May
Hi,My husband and I are considering buying a business. It is already quite lucrative and has been for some time. We are looking for $400,000.00 for 5 years unsecured. Could you tell us if there is anywhere we could apply? We would also like to make extra payments.
Hi Jan,
Thanks for reaching out.
If you are looking to apply for a personal loan, please note that most lenders offer a maximum loan amount of less than $100,000. You may want to consider a business loan that generally has a higher limit. You may also compare your business loan options featured on our website.
Cheers,
Anndy
I need 25,000 to build a deck on a new house we’ve just built.
Over 3 years, can I pay off early or make extra payments?
I can easily repay in less than 3 years, just want to make sure all is ok.
Hi Jacku01,
This depends on the lender you apply with. Usually you can make extra repayments and repay early on a variable rate loan, but again, this will depend on the lender. You can click on the names of the loans above to see a review page, where you’ll find a list of fees so you can see if extra repayments are allowed on the loan you’re considering.
Hope this helps,
Elizabeth
Hi,looking for unsecured Personal loan of $50k,asset & funds cost only $10k, so is it possible that my loan approved, as u meet the other criteria’s..
Hi Esha,
You can compare your unsecured personal loan options on the page above. Each lender will have different eligibility criteria, which you can check on the review page by clicking on the name of the loan. The review page will also list the maximum loan amount able to be borrowed with the loan, but keep in mind how much you can borrow depends on your individual financial situation and how much you can afford.
I hope this helps,
Elizabeth