What is a personal loan?

A personal loan is a type of credit that lets you borrow a set amount of money and repay it in regular installments over a fixed period of time with interest. A personal loan can be used for almost any purpose such as consolidating debt, paying for medical bills, weddings, travel or home renovations.

You can typically get a personal loan from digital lenders, banks or non-bank lenders.

There are two main types of personal loans in Australia: 

Unsecured personal loans do not require collateral, making them faster and more flexible. Approval is usually based on your credit history, income and ability to repay.

Secured personal loans require you to provide an asset such as a car or property as collateral. If you do not make repayments, the lender can claim that asset.

MONEYME offers unsecured personal loans that are simple to apply for, quick to access and designed to suit a wide range of borrowing needs.

Benefits of a Personal Loan

A personal loan can offer a number of advantages compared to other forms of borrowing:

Simplify your debt - Combine multiple debts into one personal loan with a single repayment schedule, making it easier to manage and sometimes reducing the overall interest you pay.

Predictable repayments - Set loan terms mean you know how much to repay each month and when your loan will be repaid, which helps with budgeting. Unlike credit cards that fluctuate depending on your balance.

Competitive interest rates - Personal loans usually offer lower interest rates than credit cards, making them a cost-effective option for larger expenses or longer repayment periods.

Flexible use - Funds from a personal loan can be used for many purposes, including home renovations, medical bills, car purchases, weddings, education or travel. Most lenders allow you to select the loan term and repayments to suit your budget.

No risk to personal assets with unsecured loans - Unlike secured loans that require collateral such as a car or property, unsecured personal loans do not put your assets at risk if you keep up with repayments.

Clear end date - A personal loan has a defined loan term, so you know when your repayments will finish and the debt will be cleared.

How do personal loans work?

There are a range of steps involved with taking out personal loans. To help you understand how a personal loan works, we’ve put together a step-by-step guide. 

1. Calculate how much you need 

First, decide on the amount of money you need to cover your expenses. For example, let’s say you want to take out $70,000 to pay for home renovation, buy a car, a large purchase or to consolidate debt. 

2. Estimate monthly repayments with a personal loan calculator

Using a personal loan calculator will help you estimate your monthly repayments for your desired loan amount, giving you a good indication of what to expect.

MONEYME’s personal loan calculator will also show you your estimated interest rate and total cost of the loan, and you can also play around with different loan terms to see how your monthly repayments may change. This is an estimate, though, so to get a clearer picture of your repayments you can get a personalised quote. For a more accurate view of what you could pay, it’s best to get a personalised quote.

3. Check your eligibility

Lenders will consider your application based on a number of qualifiers, and you’ll often be able to check a lender’s standard eligibility criteria on their website. This typically includes your age, visa status and employment status.  A lender will also look at your credit score and your income and expenses to assess your ability to repay the loan.  Some lenders, like MONEYME, also allow you to check your initial eligibility without affecting your credit score by getting a quote.

It’s a good idea to check your credit score before narrowing down your options. A low credit score can make it harder to get approved, whereas an excellent credit score could improve your chances of approval, increase the maximum loan amount you’re offered, and even get you a lower interest rate. In general, the better your credit score, the better the deal you’re offered.

You can check your credit score for free on the MONEYME app, without affecting your score. 

4. Compare personal loans and lenders

Once you understand your eligibility and repayment options, it’s time to compare lenders. The best way to compare overall cost is by looking at the comparison rate, which is designed to allow borrowers to understand the true cost of the loan by taking into account fees and charges, the loan amount and the term of the loan. This gives a truer picture of what you will pay other than the interest rate alone.

Also check for features that matter to you, such as whether the loan has early repayment fees or the option to top up your loan if needed. Some lenders, like MONEYME, let you get a quote without impacting your credit score, making it easier to compare with confidence.

5. Apply for a loan

Once you have chosen a lender, you can submit an application, usually online. You will need to provide personal details such as your name, address and ID, along with financial information including your income, expenses and any existing debts.

Many lenders verify your income through secure online portals that connect to your bank account. In some cases, you may be asked to upload payslips or bank statements instead. At this stage, the lender will usually perform a hard credit check, which is recorded on your credit file and may affect your credit score for a period of time.

6. Review the offer and receive the funds

Once you’ve received an offer for a personal loan, make sure you review the details and check the terms and conditions. If you’re happy, complete your application by signing the loan agreement. 

The approval process can take anywhere from a few minutes to a few days, depending on the lender. If approved, the lender will typically transfer the funds to your nominated bank account.

With MONEYME, you can often receive an outcome in as little as 60 minutes, and, if approved, your funds are transferred immediately and available to use straight away. 

7. Start repaying the loan 

Once you have received your funds, your repayments will begin soon after, with the loan fully repaid by the end of the term.

If your budget allows, making extra repayments is one of the most effective ways to save money on a personal loan. Every additional payment goes straight toward reducing the principal, which lowers the interest you pay and shortens the loan term. For example, on a $20,000 loan over five years at 10% interest, paying an extra $25 a week could save you over $1,000 in interest and clear the loan more than a year early.

Some lenders charge early repayment fees, but with MONEYME you can make extra repayments or repay your loan in full at any time without penalty.

Understanding how repayments work helps you plan ahead, stay in control and pay less over the life of your loan.

Personal loan features

When comparing personal loans, the main differences often come down to how the loan is structured and the conditions that come with it. Key features to consider include:

Fixed rate personal loan - Your interest rate and repayments stay the same for the entire loan term, making it easier to budget.

Variable rate personal loan - Your interest rate can rise or fall with market conditions, which means your repayments may change over time. This can be a benefit if interest rates are falling.

Unsecured personal loan - No collateral is required. Approval is usually based on your credit history, income and ability to repay. These offer flexibility as your loan is not linked to any asset.

Secured personal loan - An asset such as a car or property is used as collateral. These loans can come with lower rates, but the asset is at risk of repossession if you cannot make repayments.

Fees and charges - Some lenders charge establishment fees, account-keeping fees or early repayment fees. These can add to the cost of the loan, so it’s important to check them carefully.

Extra repayments - The option to make additional repayments without penalty helps you reduce the principal faster, saving on interest and shortening the loan term.

Loan top-ups - Some lenders allow you to increase your loan amount later if you need access to additional funds.

Flexible repayment schedules - The ability to choose between weekly, fortnightly or monthly repayments can make budgeting easier and may help reduce the overall interest you pay.

Comparison rate - This reflects the interest rate plus most fees and charges, giving you a clearer picture of the true cost of the loan.

Types of personal loans

Personal loans can be tailored to many different needs, from consolidating debt to funding major purchases or life events. Below are some of the most common types and how they are used.

Common types of personal loans

Debt consolidation loans - Combine multiple debts such as credit cards and loans into one repayment, which can simplify your finances and may reduce the overall interest you pay.

Car loans - Borrow funds to buy a new or used vehicle. Depending on the lender, these may be secured or unsecured, with terms and rates that vary by vehicle type and your credit profile.

Home renovation loans - Cover the cost of upgrades, repairs or extensions to your home, from kitchens and bathrooms to landscaping and major remodels.

Wedding loans - Spread the cost of venues, catering, attire, photography and other wedding related expenses into manageable repayments.

Travel loans - Finance holidays or overseas trips upfront and repay them over time rather than dipping heavily into savings or spending on credit cards which typically have higher interest rates.

Medical loans - Help manage out of pocket healthcare costs such as dental work, elective surgery or specialist treatments not fully covered by Medicare or private health insurance.

Education loans - Fund courses, professional development or other study related costs.

Other common loan reasons - Personal loans are also used for a range of other purposes, such as moving expenses, setting up a new home, purchasing big ticket items or covering unexpected emergencies. Most lenders will allow you to borrow for any reasonable personal expense.

How to Compare Personal Loans

When comparing personal loans, it is essential to evaluate three core factors: the rate, the repayments and the features. Understanding how each works will help you identify the loan that offers the best value and fits your financial needs.

Look beyond the interest rate 

The advertised interest rate matters, but it rarely tells the whole story. Instead, focus on the comparison rate, which combines the interest rate with most fees and charges. It gives you a clearer picture of the true cost of the loan.

When comparing rates, check:

Interest rate vs comparison rate: if there’s a big gap, the loan may have high fees 

Establishment and account-keeping fees that add to the total cost

Whether the comparison rate is based on a similar loan amount and term to what you need

Check what repayments mean for your budget

Repayments determine how manageable a loan feels day to day. Lower repayments can look attractive but usually mean a longer loan term and more interest overall.

When reviewing repayments, ask yourself:

How much will I pay weekly, fortnightly or monthly

What is the total cost of the loan over its full term

Could I afford slightly higher repayments to shorten the loan and save on interest

Do the repayment options align with how often I get paid

Compare features that add flexibility

The right features can save money and give you more control. Look for:

The ability to make extra repayments without penalty

No early repayment fees if you want to clear the loan faster

Flexible repayment schedules (weekly, fortnightly or monthly)

Top-up options if you might need additional funds later

Using a personal loan calculator

A personal loan calculator is one of the easiest ways to compare scenarios before you commit. With just a few details, you can see:

What your repayments will be at different loan terms

How much interest you’ll pay across the life of the loan

How much time and money you can save by making extra repayments

The impact of borrowing slightly more or less on your budget

Example: On a $15,000 loan at 10% over five years, shortening the term to four years may add less than $20 a week to your repayments but save you hundreds in interest.

The MONEYME personal loan calculator is completely free to use. All you need to do is supply some information on the amount you want to borrow and for how long. 

Final tip: Compare using online personal loan quotes

Some lenders allow you to get a personalised quote without impacting your credit score. This is a simple way to:

See the rate and repayments you may qualify for

Compare offers side by side with real numbers

Make a confident decision before submitting a full application

You can get an online quote with MONEYME in less than 90 seconds with no impact to your credit score. You can check how much you can borrow, your rate and repayments.

Personal loan eligibility

Before applying for a personal loan, it helps to understand the criteria lenders use to assess applications. In most cases, you’ll need to meet basic requirements, show that you can afford repayments, and provide documents to verify your information. These can vary from lender to lender, but typically include:

Age and residency

You must usually be at least 18 years old and an Australian citizen or permanent resident. Some lenders may also accept certain visa holders.

Income and employment

Lenders look for a steady income from employment or self-employment to confirm you can manage repayments.

Credit history

Your credit score influences both your eligibility and the rate you may be offered. A stronger score improves your chances of approval.

Existing debts and expenses

Lenders check your debts and everyday expenses against your income to ensure you can comfortably afford the loan repayments.

Documents

You’ll need to verify your ID and proof of income, usually by securely sharing your 90-day bank statement data digitally and for some lenders they also require your recent payslips.

Checking your eligibility online

With MONEYME, you can check your initial eligibility and get a personalised quote in minutes without impacting your credit score.

Tips to improve your chances

Pay down existing debts to reduce your debt-to-income ratio

Make repayments on time to build a positive credit history

Avoid multiple applications in a short period, as too many credit checks can lower your credit score

Check your credit report for errors and have them corrected if needed

Stabilise your income as lenders prefer steady employment or consistent self-employment income

Limit unnecessary credit accounts such as unused credit cards or buy now pay later accounts

How to apply for a personal loan

Applying for a personal loan is usually straightforward, and knowing the steps in advance helps you move through the process faster.

1. Decide how much you need

Be clear about the loan amount and what you’ll use it for and borrow only what you can comfortably repay within your budget.

2. Check your eligibility

Review basic requirements like age, residency, income and credit history. With MONEYME, you can check your initial eligibility and get a personalised quote in 90 seconds without impacting your credit score.

3. Gather your documents

Most lenders will need proof of ID, proof of income and details of your expenses. MONEYME makes this simple with secure online verification that links to your bank in real-time, so you don’t have to upload endless paperwork.

4. Submit your application

Applications are usually completed online. At this stage, most lenders will conduct a hard credit check that is recorded on your file.

MONEYME takes a different approach by offering conditional approval first. This means we run a set of automated checks on your credit score, income, expenses and bank statements to confirm you meet our initial criteria. You’ll know upfront that your application is strong, and this step has no impact on your credit score. A hard credit enquiry is only made once you choose to proceed and submit your application for the final review.

5. Wait for assessment

The lender then reviews your information to determine whether you are approved for the loan. With traditional lenders this may take a few days, but with MONEYME you can often get an outcome in as little as 60 minutes, even on weekends.

6. Approval and funds in your account

Once your loan is approved, the funds are transferred directly to your bank account. With many lenders this can take a day or more to clear, but with MONEYME transfers are immediate. That means there is no waiting and your money can be in your account and ready to use in as little as 60 minutes from when you submitted your application.

Ready to get a personal loan? 

With different loan options available, the key is to choose the one that fits your budget and goals. Remember to check your eligibility, understand your credit score and use tools like calculators to see how repayments will work for you.

MONEYME’s award-winning personal loans make it simple to take the next step. In less than 90 seconds, you can check your personalised rate, adjust the loan amount or term to suit your needs, and see your repayments without impacting your credit score.