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The complete guide to personal loans


Considering a personal loan? We address all the facts and questions about personal loans, even the ones you don’t realise you need to ask.

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What is a personal loan and how does it work?

Taking out a personal loan means borrowing a specific amount of money from a bank or building society. You’ll need to pay the money back in regular instalments, including any fees or interest, over the course of an agreed time period.

What can I use a personal loan for?

You can spend a personal loan on things important to you and your loved ones. You might use it to finally finish your kitchen renovation, buy things to support your growing family or to give you the financial boost you need to pay for a truly special occasion like a wedding.

How much can I borrow with a personal loan?

The amount you can borrow will vary depending on your circumstances, including your income and credit rating. Different lenders will offer different loan amounts, but Citi’s Personal Loan Plus currently has a loan range of $5,000-$75,000.

What do lenders check when issuing a personal loan?

Lenders will do background checks before offering you a personal loan. They will look into your credit history to assess your current debts – like mortgages or credit cards and other information like your current account. Your potential lender will tell you which documents you need to provide to help with their assessment.

Citi's personal lending options are unsecured loans with variable interest rates.

What different types of personal loans are there?

Secured or unsecured

A personal loan will either be secured or unsecured. A secured personal loan means that an asset that you already own – like a car, property or valuable jewellery - is used as security against the money you borrow. If you aren’t able to pay the money back, the lender may be able to sell your security asset to recoup their losses.

Unsecured loans don’t require a security asset. This type of loan can have a higher interest rate because of the increased risk to the lender.

Fixed or variable

The terms ‘fixed’ or ‘variable’ refer to the interest on your loan. Fixed interest means your interest rate will stay the same throughout the life of your loan, a variable interest rate means it can change.

Opting for a fixed interest rates means you’ll know exactly how much you’ll need to repay each month - but you won’t feel the benefit if interest rates decrease over your loan period. Variable interest rates mean you’ll pay less if rates decrease – but remember they can go up as well as down.

Citi's personal lending options are unsecured loans with variable interest rates.

How to choose a personal loan

First, put together a budget to decide how much you need to borrow and how long you will need to repay it. You can use our borrowing power tool and loan repayment calculator to help with this. Next, consider what type of loan best suits your situation – secured or unsecured, fixed or variable. Then compare your options, bearing in mind the following important factors:

  • Interest Rates – these can vary based on your personal situation, credit history and employment status.

  • Fees – look out for fees associated with setting up and maintaining your loan, and make sure you are aware of the full cost of your loan before committing.

  • Credit score – the amount you are able to borrow will depend on your credit score, so focus on options that will work for your personal situation.

  • Repayment requirements – different loans will have restrictions around how and when you can repay. These might include minimum payment requirements or a policy on early repayment.

You can compare Citi's personal lending options, and use our selection tool to help you find a solution that works for your situation.

What are the benefits of a personal loan?

  • Flexibility – a personal loan allows you to borrow money to suit your needs. The amount you can borrow ranges from a few thousand dollars to larger figures, and you are not restricted on how you spend the money like with a mortgage or a student loan.

  • Speed – the average personal loan can be approved relatively quickly, meaning you can get the money you need to keep your life moving.

What are the risks of a personal loan?

  • Hidden costs – you should always check fees before agreeing to a personal loan as you may end up owing more than you originally expected.

  • Interest repayments – it’s very important that you calculate your ability to repay your loan including the interest you will owe. Make sure you’re not caught out.

  • Credit score – how you repay your loan will be reflected in your credit score, which could affect your ability to get a loan, like a mortgage, in the future.

How to apply for a personal loan

You can apply for a Citi Personal Loan Plus online. It will take about 15 minutes. You will need to comply with the following to apply:

  • Earn over $40,000 per year

  • Be an Australian resident

  • Be over 18 years old.

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