What can an unsecured personal loan be used for?

29 September 2021

Everyone’s wants and needs differ substantially, so every personal loan comes with a personal story. So, let’s talk about personal loans and how they can be used to achieve your goals sooner or obtain what you need in a hurry. Perhaps you need a home improvement personal loan to give your bathroom a Hamptons-inspired makeover or a debt consolidation loan to put all your debts in one basket at a lower interest rate?

A personal loan is generally an amount borrowed between $2,000 and $70,000 that is unsecured (meaning that there’s no security on the item you purchase in order to obtain the loan, unlike a mortgage).

Here are just a few of the most common reasons people apply for a personal loan:

Buying a car

A new car is a substantial purchase, and even a decent second-hand vehicle could take a long time to save for. So a personal loan could be the solution if you are in need of your first car, an upgrade, or your growing family requires a bigger vehicle. Maybe you love a good road trip on rough dirt roads and need a 4WD? Whatever the wheels, a personal loan could get you on the move straight away.

Home renovations

Improvements to your home not only give you a better lifestyle but add value to your property. A well-executed renovation can improve the value of your house while making it more liveable for yourself. An extension, new kitchen or bathroom, adding a deck or landscaping are within your reach with a personal loan without waiting until you can draw on the equity in your home.

These days, many homeowners seek a more sustainable lifestyle. A personal loan can be used to achieve this, and save money in the long-term, if used to add solar panels, a solar hot water system, a greywater recycling system or a water tank.

Debt consolidation

Are your credit card and other debts getting out of hand and causing you stress? Are you paying higher interest rates than you need to? Consolidating all your debts allows you to streamline all the various payments into one fixed monthly payment, often at a lower interest rate. A debt consolidation loan can get you back to feeling in control of your finances and sighing with relief in next to no time.

While a personal loan is one debt consolidation option, there are others to also consider such as a low-interest credit card or engaging a free financial counselling service to determine a debt management plan.

Moving house 

A personal loan can cover the costs involved with moving house, which can get quite expensive depending on the size of your house and the logistics involved, especially if you are moving a long distance. Moving house costs can include more than just removalists, such as temporary accommodation, storage, and pet relocation – which can all add up!

Paying for a lavish event

Wedding bells chiming or a mega family birthday or anniversary looming? With a personal loan you can manage all the upfront costs and ensure your big bash is a sensational success.

That dream holiday

Okay, we understand that travel is not an option right now (sigh!). So now could be the time to start saving for that family trip around Australia or dream overseas holiday, then top up your savings with a personal loan when borders reopen and airports are bustling once again. It’s certainly something to look forward to!

Medical needs

In a medical emergency, or if you are having elective surgery or even major dental work, a personal loan to cover costs will allow you or your loved one to focus on recovery and well-being, not on how you’ll pay medical bills.

Education fees

If finances are a barrier to education, a personal loan can fund these costs and allow you or your child to gain an education now with flexible terms to pay off the loan in future. Undertaking any paid education is an investment in your future, and a personal loan or credit product can help secure this sooner rather than later.

Fees for education can be significant over the course of several years and a personal loan can help you finance these so you can focus on studying.

Education fees that can be covered with a personal loan include:

  • Private school fees
  • University course fees
  • Trade course fees
  • Training / course costs for upskilling

Graduation awaits!

What to consider before taking out a personal loan

Whether you need a home renovation loan, a debt consolidation loan or a new set of wheels, a personal loan can help you achieve your goals sooner.

Before applying, however, take a look into alternatives such as saving the money upfront or using a credit card that might offer different benefits, and look into the conditions of the personal loan you are considering. Different lenders offer different loan terms, minimum and maximum loan amounts, interest rates and application fees, so take the time to find the right product for you.

Content brought to you by Alex Bank

Important Information

The content on this page is general information only, it is not intended to be advice or a substitute for professional financial advice. It does not take into account your situation, needs or objectives, you need to consider whether it’s appropriate for your situation and if you should consult professional advice. You should assess whether an Alex Bank personal loan is the best product based on your needs and situation and read the fine print, terms and conditions and compare different personal loan products on the market or seek professional advice.

Applications for finance are subject to Alex’s normal credit approval. Terms, conditions, fees & charges apply. Alex Bank Pty Ltd ABN 13 627 244 848 (“Alex”) is operating under a time limited and restricted Banking Authority. Further detail is available at www.alex.bank/legal. AFSL and Australian Credit Licence