All of us will, from time to time, go through periods when we need extra cash. Whether it’s to pay for the daughter’s wedding, finance that extension that your wife has been craving for or to finally get that replacement car you’ve needed for the past 5 years, we sometimes need a little help. But how do we arrange one of those personal cash loans without falling for some of the old tricks that end up making a loan cost a lot more than you bargained for?

The first tip for arranging personal finance loans is to take your time. Don’t rush out and get the first loan you lay your eyes on because you think it’s a decent interest rate and you know your credit rating is good, so it will be easy.

There are plenty of great Australian personal finance sites out there which specialize in listing the best personal cash loans on the market, so use them. Take time to compare what’s on offer and which one could suit you best. Not only that but they will have personal loan calculators that will enable you to feed in the details of the loans you are looking at so that you can compare how different APRs affect the repayments, how higher monthly repayments will affect the loan period and the total interest paid and so on.

Personal cash loans involve more than just comparing interest rates – if they didn’t, they would be easy. The first thing you need to bear in mind that fees and charges may apply that can completely alter the shape of a loan. These may be in the form of loan establishment fees (one off), monthly account fees, fees for missing payments or early repayment fees whereby you will be hit with a one-off charge for repaying the loan early – this may so large that it offsets the savings in interest payments made by repaying the loan early!

Personal finance loans come in two different major forms that you need to be aware of: secured and unsecured. A secured loan will allow you to benefit from lower interest rates but you will have to put up an asset against the loan to minimize the lender’s risk – which they may be able to claim and sell if the repayments are not made. An unsecured loan involves no asset but does mean higher interest rates, unfortunately. The lender will usually have to be convinced by some hard proof that you have the ability to repay an unsecured loan.

A word of note to low-income owners who are unable to get personal cash loans due either to a bad credit rating or because they cannot afford one: they may qualify for a low or no interest loan via NILS (No Interest Loans Scheme). It is designed to help those on welfare benefits who need affordable credit to buy health equipment, make car repairs or buy essential household furniture.

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