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Get your finances in order
Get your finances in order
8 July 2009
Personal loans, as opposed to the credit card, are becoming the popular choice when it comes to purchasing big ticket items and consolidating debt.
Canstar Cannex Head of Research Steve Mickenbecker said personal loans have been making a comeback for some time.
While credit cards are easy and convenient, for some they are too easy not to pay off, and have lead to the spiraling national debt level of $43 billion.
For many, personal loans have been their salvation.
“We are finding increasingly that people are taking out personal loans to consolidate their debts” says Steve. You can’t just walk into a shop, pull out your personal loan and buy on impulse.
According to Steve, not every personal loan is as good as the next.
"Price is always important, so it's got to be a low price loan," he said.
"Don't just look for the interest rate, look to see whether there's an ongoing fee, look to see whether there's an application fee, because they all add to the cost of your loan."
A good interest rate at present on an unsecured personal loan is around 11 per cent.
Generally the best personal loans are from credit unions and the like, as the big banks steer their customers towards credit cards.
As for car loans, these are simply personal loans secured against the car which usually means borrowers can secure a much lower interest rate of around 5 or 6 per cent.
As for car loans, these are simply personal loans secured against the car which usually means borrowers can secure a much lower interest rate of around 5 or 6 per cent.
"The other thing with car loans is that there's a bit of a trap that people fall into," steve said.
"Saturday afternoon will come and they'll go around to all the car yards, find a car and sign up there and then for the credit.”
"Really, don't do that. Do your homework first and find out about the borrowing possibilities before you go to the car yard."
*Data as at 2 July 2009.Source: Today Tonight, 02 July 2009.
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