Most people get a personal loan from time to time and it’s an area that it’s got you know few little twists and turns.
We have an interview with Steve Sell from Free Credit Report and one of the things we’re going to go over today is personal loans.
So, let me just ask first of all what’s the maximum loan amount for a personal loan?
Okay for an unsecured personal loan the maximum is $40,000 and that can be spread over up to seven years.
Okay so does the interest rate vary depending on whether it’s secured or unsecured?
Yes, the secured loan will be cheaper than an unsecured loan and the interest rates vary depending on your personal details.
So, the stronger you are better credit score, asset backing you’re going to get a lower rate than someone that’s renting and doesn’t have a higher credit score.
Okay but they’ll still be able to get a loan just the interest rate might be slightly different?
Depending on their circumstances, Yes.
Okay fair enough. So, what’s the maximum loan term for a personal loan?
Seven years. And minimum?
What things can I borrow if on a personal loan?
Okay most legal purposes, so that covers just most things.
You know people buy older cars that don’t fit a car loan or a normal car loan, maybe for swimming pools, spa pool, home improvements those type of things.
So, let’s just say I’ve got a few credit cards hanging around that I’d like to get cleared up and you know maybe I’m paying 17% or 14 or whatever the banks are charging this this month can I sort of get that into a personal loan and you know may be borrowing for something else and get it all in one in one payment. Is that something I can do?
Sure you must have a good Bank because most people are paying 21 plus on their credit cards, but yes consolidating debt is a popular way to use a personal loan, that multiple payments can be bundled into one loan and unlike a credit card each payment you pay reduces loan and you’ve got a definite time period to pay it off.
What’s the sort of the average credit card amount that people look to consolidate?
Look that varies from person to person but you know twenty thousand dollars on one card, five thousand on another, three thousand on a store card, that type of thing is not unusual.
Okay so it could be thirty thousand dollars you’ve got out there. And if they’re paying 21% that’s like four thousand two hundred a year in interest difference?
Well I think the biggest thing is that people look at the minimum payments on their credit card and if they do that yeah on their statements that will tell them how many years will take to pay it off and if you pay the minimum payment often it can be decades before you pay it off whereas with a personal loan you’ve got one payment and the maximum amount of time to pay it off for seven years.
So, in terms of percentages and I know it depends on how your credit rating is and your circumstances, but what sort of range of a personal loan percentage are we looking at?
Okay so they can range from 9.9 to 29.9 percent so there’s a big range there and if they do it will entirely depend on your personal details.
Okay so let’s say you had a job and you didn’t have any bad credit score, you might be sort of towards the 9% range.
So, essentially if you’re paying 21% on your credit cards, You can make a saving in that regard as well as paying it off over a set period.
So, my math is a little bit rusty because I haven’t been to school for a while that sounds like 12% difference?
So, if you had like 30,000 and that was 12% difference between 21% and 9% that’s like $3,600 a year on $30,000.
It’s not quite like that but yes it makes a huge difference.
All right I said I was a bit rusty so sorry about that.
What if I’ve never borrowed before?
Okay then once again it comes back to you, your personal details, stability in job, stability in address and your income.
Okay fair enough. All right so if someone wants to get a personal loan what do they do?
Okay you can start by having a look at Freecreditreport.com.au.
Now that doesn’t leave or damage your credit score and that will determine where we could go to get you a loan or you can call us on 1-800-100-100.
Okay I’m sure people looking for personal loans, that’s going to be very helpful for them.