Business Loans Australia :: Articles

When should I use a personal loan?

What are the best situations to use a personal loan?

When should I use a personal loan?

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

Unsecured personal loans can really help in a pinch. If your savings are low and your car breaks down, for example, such a loan can patch up your life. Or maybe you're buying a big-ticket item and you need backup money to cover a short-term hole in your bank account.
Unsecured personal loans are designed to be undertaken without the need to secure the loans against collateral, such as a property or a car. This makes unsecured personal loans ideal for people who do not own their own home and for people who have no other type of collateral to secure personal loans against.

Convenience

Part of their convenience is how quickly they can be approved - usually in one banking day, three tops.
Financial institutions don't care much about how you use an unsecured personal loan as long as you are a good candidate to pay it back.
The hitch is that because the borrower has no security, unsecured personal loans can be more expensive than secured loans.
These days, even the new crop of low-rate credit cards can often be cheaper than unsecured loans.
And besides interest, watch out for any annual service or maintenance fees on the loan that is either a flat fee or a percentage of the lump sum.
On the plus side, greater competition in personal loans from smaller financial institutions like the credit unions means there is a huge variation in the interest rates being charged - from 9 to 15 per cent.

Who qualifies?

Unsecured personal loans have a wider reach than secured personal loans. Both tenants and homeowners can take out unsecured loans, as well young people who have no verifiable personal credit history. Additionally, unlike secured personal loans, unsecured loans may also be open to people who have a poor credit record.
To successfully apply for a personal loan, the applicant for the loan must have a regular source of income. Proof of income from the unsecured loans applicant is likely to be requested by the personal loans companies and many lenders will also carry out background checks on other loans, secured or unsecured, that the personal loans applicant holds now or has held in the past.
Personal unsecured loans applicants who have been resident at the same personal address for more than three years, are married and have stable employment are those most likely to be successful in obtaining personal unsecured loans.
For homeowners, personal unsecured loans are ideal should the homeowner wish not to have personal loans officially secured against their property. The most successful applicants for unsecured loans in these cases are people who have equity in their property and no other unsecured loans. These factors above all else will help the homeowner applicant acquire unsecured loans, even if the homeowner has a bad personal credit history.
Loans companies offering unsecured borrowing in general do not limit what the funds from unsecured loans can be used for, so long as the person taking out the personal unsecured loans does not use the unsecured loans funds for illegal purposes.

Published: Sunday, 1st Aug 2021
Author: Paige Estritori

Rate this article

0 Comments

No comments yet. Be the first to share your thoughts.


Business Loans Articles

Equipment Leasing for Australian Businesses: Cash Flow, Costs and Key Considerations
Equipment Leasing for Australian Businesses: Cash Flow, Costs and Key Considerations
Equipment leasing can help Australian businesses access vehicles, machinery, technology or other essential assets without paying the full purchase price upfront. This guide explains how leasing works, how it may affect cash flow and budgeting, and what to consider before choosing a lease arrangement. - read more
Breaking Down Barriers: How to Overcome Delays in Business Loan Approvals
Breaking Down Barriers: How to Overcome Delays in Business Loan Approvals
Embarking on a business endeavor often requires substantial financial support, and securing a business loan can be a crucial step towards progress and expansion. A well-prepared loan application not only showcases your business in its best light but also significantly enhances the prospects of obtaining the needed funds. Attention to detail and a thorough understanding of the lending process can streamline your journey to approval. - read more
From Setbacks to Success: Overcoming Credit Challenges and Fueling Business Growth
From Setbacks to Success: Overcoming Credit Challenges and Fueling Business Growth
In the dynamic world of business, navigating credit challenges is a reality for many Australian business owners. These challenges can stem from various sources, including unpaid customer invoices, unexpected expenses, or the complexities of managing cash flow. Such hurdles often come at inopportune moments, leading to recurring stress for entrepreneurs trying to maintain a stable financial standing. - read more
Understanding Business Loan Terms and Conditions: A Guide for New Business Owners
Understanding Business Loan Terms and Conditions: A Guide for New Business Owners
Starting or growing a business often requires capital for equipment, stock, staffing, premises or day-to-day cash flow. Business loans can help fund those needs, but the details in the loan agreement determine how the finance works, what it may cost and what obligations the borrower accepts. - read more
How Business Loan Interest Rates Work in Australia
How Business Loan Interest Rates Work in Australia
Business loan interest rates in Australia vary because lenders price each loan according to the product, market conditions, business risk, security, loan term and the applicant's financial position. Understanding these factors can help SMEs compare loan offers more confidently. - read more
How to Compare Business Loan Features Before You Apply
How to Compare Business Loan Features Before You Apply
Comparing business loan features is an important part of understanding the different finance options available to your business. Loan products vary between lenders, with differences in interest rates, fees, repayment terms, borrowing limits and eligibility criteria. - read more
Start-Up Loans in Australia: How New Businesses Can Access Capital
Start-Up Loans in Australia: How New Businesses Can Access Capital
Starting a business in Australia often requires capital before revenue is consistent. This guide explains how start-up loans and other business finance options may help new businesses fund operations, equipment, technology or growth, and what lenders commonly look for before offering finance. - read more

Finance News

Payday Super Puts Payroll Timing Under the Finance Microscope
Payday Super Puts Payroll Timing Under the Finance Microscope
02 Sep 2026: Paige Estritori
Australia’s move towards Payday Super is more than a compliance update for employers. For many small and medium-sized businesses, it changes the rhythm of payroll-related cash outflows and places a sharper focus on whether day-to-day liquidity is strong enough to meet obligations as they fall due. - read more
Specialist SME Lending Remains Open, But Discipline Matters
Specialist SME Lending Remains Open, But Discipline Matters
26 Aug 2026: Paige Estritori
Latest market reporting around specialist SME lender Judo Bank points to a business credit market that is not shutting down, but is becoming more deliberate. The lender’s continued focus on relationship-led lending, deposits and small to medium-sized business borrowers suggests demand for finance remains present among firms with clear plans and serviceable cash flow. - read more
Payment Timing Keeps Pressure on SME Working Capital
Payment Timing Keeps Pressure on SME Working Capital
19 Aug 2026: Paige Estritori
Fresh small business indicators are again pointing to a familiar challenge for Australian SMEs: trading activity may continue, but the timing of cash receipts is still creating pressure. Recent industry commentary has highlighted uneven payment behaviour, cautious customer spending and a more deliberate approach to investment among smaller firms. For owners and finance managers, that combination can make working capital planning just as important as sales growth. - read more
Payment Delays Put Working Capital Back on the SME Agenda
Payment Delays Put Working Capital Back on the SME Agenda
12 Aug 2026: Paige Estritori
Late invoice payments are again emerging as a practical funding issue for Australian small and medium-sized businesses, with fresh industry commentary pointing to continued pressure across trade payments, cash reserves and day-to-day operating liquidity. For business owners, the message is clear: revenue on paper is not the same as cash in the bank. - read more
Rising Business Failure Risk Puts Cash Flow Back in the Lending Spotlight
Rising Business Failure Risk Puts Cash Flow Back in the Lending Spotlight
04 Aug 2026: Paige Estritori
Fresh business risk signals are reinforcing a clear message for Australian SMEs: access to credit is still available, but lenders are likely to keep asking harder questions about cash flow, repayment capacity and the resilience of each borrower’s operating model. The latest commentary around business failures, trade payment pressure and sector-specific insolvency risk points to a market where credit decisions are becoming increasingly evidence-led. - read more
Business Borrowing Momentum Is Becoming More Selective
Business Borrowing Momentum Is Becoming More Selective
28 Jul 2026: Paige Estritori
Australia's business lending market appears to be entering a more selective phase, with the latest banking signals pointing to a widening gap between larger companies still seeking capital and smaller firms taking a more cautious approach. While credit is not disappearing, lenders are increasingly focused on serviceability, cash flow consistency and the purpose behind each new facility. - read more
Small Firms Tap the Brakes on Borrowing in June
Small Firms Tap the Brakes on Borrowing in June
21 Jul 2026: Paige Estritori
Australian small businesses appear to be moving into a more defensive phase, with new Equifax data for June 2026 pointing to a sharp divide between larger companies still borrowing for expansion and SMEs conserving cash. The latest Business Market Pulse suggests overall business loan demand is still growing, but at a slower pace than the stronger credit activity recorded late last year. - read more

Need Help Finding a Loan?

Start here

Let us help you explore your business finance options.
Loan Amount:
Postcode:

All quotes are provided obligation-free by a participating broker from our national referral partner network. We respect your Privacy.

All finance quotes are provided free (via our secure server) and without obligation.
We respect your privacy.

Knowledgebase
Interest Coverage Ratio:
A measure of a company's ability to make interest payments on its debt, calculated as EBIT divided by interest expense.