Which finance option is right for you?

There are many different financing options available, including mortgages, auto loans, personal loans, loans for bad credit, small business loans, and payday loans and each comes in a secured and non-secured version.

Types of personal loans available

The type of loan that suits you will depend on a number of different things, including what you need the money for and if you have security to provide against a loan.

The way that any type of loan works is that you borrow an amount of money and sign a contract promising to pay back the money over a certain agreed-upon period of time.

While most lenders offer special deals and low-interest rates that may seem attractive, it's very important to look at your options carefully and shop around for the best financial solution.

What is a secured personal loan?

A secured personal loan is a loan that is secured by an item of collateral the loan is usually between $1,000 and $80,000 depending on the terms of the loan agreement and the value of the collateral.

Personal loans can be used for anything and don’t have any restrictions attached. These types of loans are perfect for once off big items or for holidays and travel.

Personal loans allow you to determine your terms so you don’t struggle to repay your debt. It is advisable to pay off your loan in the least amount of time possible.

How do interest-free loans work?

An interest-free loan might seem like a very attractive deal, but no matter what you have purchased if you don’t pay for the item fully in the interest-free period which is usually between 12 to 24 months then you could end up paying a lot more than you bargained for.

Most of these deals come with a store card that entices you to spend more on credit. These goods need to be paid for and a direct debit is usually set up on the account so that the creditor has more security that you will repay the loan.

What are payday loans & how do they work?

A payday loan got its name because it must be repaid by the next payday. These types of loans are normally no more than $2,000. A direct debit is set on your account to run at an agreed-upon date that usually aligns with your payday.

Getting a payday loan approved is usually very easy and the requirements are a lot less strict.

Payday loans usually charge an establishment fee of 20% and other extra charges. If you are already struggling to make ends meet then additional charges on top of paying back the full outstanding amount may push you further into debt.

Different types of home loans available in Australia

There are hundreds of different options available when it comes to home loans they are all based on two key factors.

• Principal – this refers to the amount of money that you borrow.
• Interest – the amount that you pay to be able to borrow the money. This fee is usually calculated on the outstanding balance.

The different types of mortgages explained

Variable mortgage refers to the interest rate that you are charged on your home loan. A variable rate moves up and down with the fluctuating markets and is set by the reserve bank of Australia. This makes budgeting a lot harder than a fixed interest rate.

A standard variable home loan allows for flexibility many of them offer special features such as redraw facilities, chequebooks and the ability to transfer your loan in the future.

A fixed-rate mortgage charges you the same amount of interest throughout the entire loan term. This allows you to budget more easily as you will always know the amount that you need to pay.

If the market interest rate rises or falls this won't affect your repayments in any way so you won’t benefit from a lower interest rate.

Different types of business loans available

There are many different types of business loans available in Australia these types of loans include secured and unsecured options. There are many attractive deals available for new young business entrepreneurs or small businesses that are just starting out.

Small businesses can use these loans to help grow and fund their business to make more profits. Small business loans are usually less than $250,000 while a larger business could borrow up to $1 million.

Business loans can be used for:

• Product development
• Marketing and promotional material
• Staffing costs
• Lease agreements and rent
• New technology and inspiring innovation

The type of loan that you require will depend on how much money you need to borrow. What will the loan be used for and how long you will need to repay the loan? If your business can offer a form of collateral, then it may qualify for a lower interest rate or better terms.

A business overdraft facility is attached to your existing account and allows the business access to extra funding once there day to day account is overdrawn. The overdraft is available up to an agreed-upon amount and does not have a time frame by that it needs to be paid back by.