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The personal loan market has grown considerably in Australia over the past 5 years, many people are choosing to finance their lifestyles with debt.

This is causing a debt trap for some people when they apply for a personal loan, so it’s important that you understand what you are getting into and to understand that there are sometimes other alternatives if you need to borrow money.

Things You Should Consider Before You Apply for a Personal Loan

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Do You Need a Loan?

If your loan is for paying off a utility, or other service, you could first try to contact that company under a hardship application and work out an installment plan. Many people don’t know that this option is available, and it’s better than applying for a loan.

In some cases, no interest (or low interest) loans can be available as well if the loan is for essential house good goods or personal services such as medical treatment.

You may even use these loans for travelling, which, by the way doesn’t have to be expensive. Finally, if your loan reason is urgent you might be able to get a Centrelink advance payment as well.

Cheap Funding Options

If none of those options are appropriate, then a cheap funding option could be to use a credit card with an interest free period and you pay back the loan amount within the interest free period.

Care must be taken to check the fine print of your conditions with the financial institution. In most cases the interest free period will not extend to cash withdrawals and is limited to the purchase of goods and services.

Other options include getting a low interest rate no frilled credit card, that could be a much cheaper option than a payday loan.

Personal Loans

If it is a personal loan you are after, and you have a good credit history, try your bank first as often they can provide cheaper loans that other lenders, especially if you decide to secure your loan with an asset such as a car.

Loans at higher rates (up to $5000) are available from companies such as Spotter Loans. If the loans are under $2000, they typically incur a 20% establishment fee and a 4% per month account keeping fee as well as a monthly fixed account fee.

Loans between $2001 and $5000 are generally taken out with a $400 establishment fee and a total maximum annual interest rate of 48%. If you are considering taking out one of these loans, and are looking for a cheaper rate, then offering up security such as a car can often help reduce the rate.

Assessing Your Loan

When assessing your loan, these types of lenders will often look at many personal details including 3 months bank statements and your credit file to ascertain whether they can lend to your or not.

When considering taking out a loan there are some low-cost options and some high cost options. Often the low-cost options take a little more work upfront but will save you money.

So, you might like to take the time to go through that process. If the matter is extremely urgent, then the payday lending space could help. Make sure you can afford any repayments that you take out.


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Megan is an Australian Journalist and award-winning travel writer who has been blogging since 2007. Her husband Mike is the American naturalist and wildlife photographer behind Waking Up Wild; a website dedicated to opening your eyes to the wild & natural world.

Committed to bringing you the best in adventure travel from all around the globe, there is no mountain too high, and no fete too extreme! They haven’t been everywhere, but it’s on their list.

If you enjoy getting social, you can follow their journey on FacebookTwitterYouTubePinterest and Instagram.

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