Spotter provides short-term loans to help you out of life’s little emergencies.
But would a personal loan be a better solution? At Spotter, we can help you obtain a personal loan if it’s a better choice for your circumstances.
So how do you know? What’s the difference between a typical Spotter loan and a personal loan? We’ve put together this handy guide to personal loans to help you choose.
Personal loans are designed to help you pay for personal expenses or assets like a holiday, a car, home renovations etc. Some personal loans can only be used for particular purposes and not for others.
Depending on the loan you choose, you’ll typically be able to choose some or all of the following features:
Repayment flexibility – Repay the loan in weekly, fortnightly or monthly instalments to suit your schedule. You may like to coincide the repayment with your salary payment, to ensure you have the funds available to meet your repayment.
Early repayment – Some loans will allow you to repay the loan early without penalty, should you choose to.
Flexible use – Some personal loans allow you to spend the funds on whatever you choose, as long as you can meet the repayment comfortably. Others come with certain conditions. For example, a car loan may only allow you use the funds to purchase a car, and some loans cannot be used for business purposes.
Loan management – It can be convenient to manage your loan online. Some lenders will require payments via direct debit, whereas others will require you to make a payment. Some lenders will make it easy for you to contact them online or via social media.
Interest rate – This is a major factor to consider. The interest rate impacts how much you’ll end up paying the lender in addition to the amount you borrow.
A fixed interest rate means that the interest rate is set at loan establishment and will not vary. A variable interest rate may rise or fall, causing your regular repayments to increase or decrease.
Another rate you may encounter is the comparison rate. This is the interest rate with all the fees and charges included. This is a convenient way of comparing rates from different lenders, to ensure you’re comparing apples with apples. This is also known as the annual percentage rate (APR). You can work out how much you’ll interest you’ll be repaying over the life of the loan by multiplying the APR by the amount of the loan. Check with the lender though whether the APR contains all the fees and charges for the loan.
Loan term – This is how long you have to pay the loan back. Generally speaking, personal loans have a term of between 1 and 5 years.
Fees and charges – These often differ between lenders. Make sure you ask the lender or broker what these will be. Common ones include establishment or application fees, monthly or annual fees, and fees for redraws (withdrawing money you’ve repaid). Some lenders will also charge you for direct debits and may charge penalties for early repayment.
Secured or unsecured – Some loans will be attached to the thing you’re buying, such as a car or to some other asset. In the event you can’t repay the loan, the lender has the right to take the asset and sell it to recover funds to repay your debt. For this reason, secured loans are less risky to the lender and often come with a lower interest rate for you.
Unsecured loans are not attached to any ‘thing’ and so often come with a higher interest rate attached.
Personal overdraft – This allows you to redraw more money that you have in your personal savings account. You pay interest on the amount below zero. There will be a limit to how much you can overdraw your account.
Line of credit – This allows you to have funds available when you need them, but you only pay interest on the amount you have borrowed, not on the total amount available. A line of credit often offers you a higher maximum amount of credit than a personal overdraft.
That will depend upon the terms of the loan which are set by the lender. Common uses for personal loans include:
Debt consolidation – To pay out other debts you may have that you’re paying a higher interest rate for, such as paying off a credit card, and/or to take many smaller debts, often with different lenders and roll them into one single debt with one lender. This can make your debt easier to manage. It may also help you decrease your total repayment each month.
Car purchase – Personal loans are often suitable for used car purchases, whereas car loans are often used for new car purchases.
Renovation – For property renovations or improvements.
Travel – Some personal loans can be used to finance personal travel, such as an overseas holiday.
Unexpected expenses – To cope with unexpected bills, emergencies or other situations.
This will vary from situation to situation, but often personal loans will have a lower interest rate and may be repaid over a longer period.
Personal loans may be more difficult to obtain than a Spotter loan if you have a poor credit history.
But it’s important for you to choose the loan that’s right for you.
This will depend on the lender but most lenders and Spotter Loans will often require:
- Bank statements
- Copies of other bills or credit contracts
The lender will want assurance that you can repay the debt without undue hardship.
Contact us today and we can answer any other questions you have about personal loans or about other loans that Spotter offers.
Here’s what a loan might look like
Here’s what a small loan might look like…
You’re after a loan for $1,000 for medical or dental bills. Your are looking to repay the loan back after 6 months and are happy to make fortnightly payments.
In the above example You’ll pay:
- Loan Amount Financed: $1,000
- Establishment Fee: $200 (set by NCCP at 20% of the loan amount)
- Monthly Permitted Fee: $40 per month charged on the anniversary of the loan
- Amount of Credit of the Loan: $1,240
- Total Amount of Interest Payable: NIL
- Direct Debit Fees: $25.74 ($0.99 per transaction)
- Total amount of repayments: $1,440.00
- Nominal Percentage Rate (Interest) per annum: 0% as defined by NCCP
Comparison Rate: 160.0571% as defined by NCCP
Here’s what a medium loan might look like…
You’re after a loan for car repairs for $2,500 and are looking to make payments back on a weekly basis over 2 years.
In the above example You’ll pay:
- Loan Amount Financed: $2,500
- Establishment fee: $400 (Set by NCCP)
- Amount of Credit of the Loan: $2,900
- Total Amount of Interest Payable: $1,590.86
- Repayments: 103 x $43.19 + $42.31 (a final payment)
- Total amount of repayments: $4,490.88
- Nominal Percentage Rate (Interest) per annum: 48% as defined by NCCP
Comparison Rate: 65.5138% as defined by NCCP
For loans under $2000 the minimum repayment term 90 days, maximum repayment term 12 months.