Personal loans are used for a specific purpose, such as a holiday or car or any other legal purchase. In fact just about any legal purpose. The approved loan amount is repaid over a range of loan terms, generally between 12 months and five years, some lenders allow a longer loan term. Like all finance agreements, there is a legal contract which will specify the amount borrowed, the repayment amount, the interest rate, either variable or fixed over the loan term, any fees that are applicable and how you will repay it.

Each lender has different loan conditions. Most are a fixed interest rate for the term of the loan. A select number of lenders, also allows the borrower to increase the loan repayments and reduce the interest that the borrower pays and also the time (term) in which the repayments need to be made. Others do not allow this flexibility and/or could pass on their loss of revenue to the borrower.

A personal loan may be secured or unsecured. It depends on whether an asset such as a motor vehicle or property is offered as security for the loan. Secured loans generally offer a lower interest rate, but run the risk that the credit provider may have the right to sell security, if the loan repayments are not met on time or the loan goes into default.

Paul can help clients determine the most suitable lender and loan product that best suits a borrowers needs.