Top 3 things Australians use a personal loan for

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on June 6th, 2023       

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There are many times where Australians face the challenge of not having cash upfront to take care of expenses or short-term goals. A personal loan can help take care of a diverse range of expenses to help effectively manage expenses. Here are some of the common reasons why Aussies use a personal loan.

The rise of personal loans

Personal loans are becoming an increasingly used loan due to the competitive rates that are available on the market and the flexible repayment structures that come with it. However, its selling point is probably the fact that the loan can be used for a wide range of things.

There has been a significant increase in the number of Australians that took out a personal loan to cover their expenses. According to the Australian Bureau of Statistics, personal loans rose by 3.8% in August. Furthermore, data revealed that 19% Millennials are taking out more personal loans.

Top three reasons for a personal loan

When it boils down to it, most Australians take out a personal loan to cover the purchasing of a car, followed by debt consolidation, and holidays. We put studied ABS data which revealed that households fork out a total of $5,859 million on personal loans. Despite this being a 0.3% drop when compared to the $5, 879 million in August of this year, it still forms part of many households' budgets.

Cars form can be expensive, but for it can be considered a small price to pay for Aussies that are looking for the convenience of being able to drive around. About 1,324 million Australians were estimated to have taken out a personal loan to cover their car expense in 2016 alone.

Debt consolidation is a big feature when it comes to seeking financial freedom with Aussies borrowing $6.05 billion to consolidate their debt. As much as it can be handy to use a personal loan to handle such expenses, there are still some consumers that are being caught out by not checking the loans fees and features.

71% of Australians don’t know what their credit score is

Your credit score plays a vital role when it comes to finding a personal loan that is suitable for your financial situation. However, a recent survey by RateCity revealed that 71% of Australians didn’t know what their score was. Furthermore, 46% were not aware that their score affects their loan interest rate. Therefore, it is vital that consumers carefully consider the loans features, interest fees, ongoing fees and charges to see if it is suitable for them. Failing to do so can land them in more financial trouble than before.

Although personal loans offer the flexibility and the ability to find a competitive rate that works for your finances, keep in mind to always assess your reason for taking the loan out. It can help you make an informed decision on whether a personal loan is suitable or not for your current situation.

Compare personal loans today

We’re here to help you find the most affordable options, so there’s no better way to compare personal loans and rates than right here, all in one place.