Personal loans can be complicated. One of the points that confuses a lot of borrowers is the interest rate. Often a friend or acquaintance will get a personal loan offer from the same lender with a completely different rate, and it can be difficult to understand why.

The lender’s criteria

When a company lends out money, they want to know that they’ll get it back, with interest. That’s why every lender has a set of criteria around who they will give loans to. These criteria are usually unique to each lender, and fits an algorithm that gives it the best chance of making money with its lending activities. Often, borrowers will fit into one of a number of groups, ordered by the level of risk calculated. The higher the risk associated with a group, the more interest a lender will generally charge, to offset the risk that it’s taking.

Your lender profile

Your lender profile gives lenders the criteria they need to calculate whether they’ll give you a loan and, if so, the interest rate that they’ll offer. It’s based on a number of factors, including your credit score, your level of income stability, the number and types of assets that you can offer as security, your income, and your repayment history.

Your credit score

Your credit score is the most important factor in your lender profile, and it’s been gaining more and more importance to lenders over the last few years. If your credit score is under 600, many lenders won’t even bother to look at the rest of your profile. A number of potential borrowers don’t realise that they have defaults listed on their credit profiles, and are unknowingly applying for loans with bad credit scores.

Choose a lender that fits your profile

When we’re looking at possible loans for a customer, we try to match your lender profile against a lender that values the criteria you score best with. This not only gives you the best chance of getting a loan; it also provides you with the lowest possible interest rates.

Easier to just get a credit card?

When you mention to friends and family that you’re looking for a personal loan, a common piece of advice is, “Just get an extra credit card instead, and put it on that!”. While this is often the easier of the two options in the short term, it can also make life a lot more difficult long term. The interest rate on a typical credit card is 22%, whereas a personal loan might only be 10% or less. If it will take you a few months or more to pay off, then that 12+% will really make a difference to your budget. You’re generally better off borrowing a set amount for a set purpose than simply adding it to your credit card.

Don’t just apply to lots of lenders

Every loan application that you fill out can leave a footprint on your file and lower your credit score. Multiple applications in a small time frame – loan shopping – can have a significant negative effect. One of our clients had an excellent credit history and his score should have reflected that at 650-690. But 4 different lenders had listed loan applications within 12 months, and his credit score suffered even though he hadn’t accepted any of the offers.

Know your credit score before you start

Your best bet is to find out your credit score before you start looking at personal loans, and then find a lender that best dovetails with your lender profile. We can retrieve your credit score without leaving a footprint on your credit history and match you up with the lender who’ll give you the best deal.


It is super easy to apply for a personal loan via our online application. Click the button below to get started. If you need help with the application, feel free to contact our office phone: 1300 360 450. or send us a message via our contact page.

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