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Why Choose Friendly Finance?
Here at Friendly Finance, our objective is to help Australian customers make informed financial decisions by offering topical content and valuable knowledge on the most popular consumer financing products. Friendly Finance also provides each visitor with a free, no-obligation loan search.
By collaborating closely with financial institutions to comprehend the needs of Australian consumers, we hope to establish ourselves as one of the most reliable sources for information on consumer finance, while also functioning as a credible option for funding needs in Australia.
Disclaimer
There is a wide variety of loans and lenders in Australia that you can choose from. Depending on your needs and eligibility, there are options you can consider to best fit your financial requirements.
The Australian Securities & Investments Commission (ASIC) requires that all lenders, lessors, and finance brokers either hold a licence themselves or act as representatives of those who do.
ASIC also makes sure that banks, credit unions, and brokers don’t provide you with credit that you can’t pay back. They may also penalise financial service providers who misrepresent facts, mislead customers, or act unethically.
Before doing business with a credit provider, check their licencing status on ASIC Connect’s Professional Registers
How Do Loans Work?
Principal, interest, instalment repayments, and term are the four main characteristics that all loans generally share. You can determine if a loan will meet your needs and whether you can afford to take one out by understanding each of these variables.
Principal
This is the sum of money you borrow from a creditor or lender.
Interest
The interest rate determines how much you must pay back on top of the principal. The type of loan you are applying for, how long it will take you to repay it, and your credit score are all taken into account by lenders when calculating your interest rate. The interest rate is not the same as the annual interest rate (p.a.), which also takes into account additional expenses including upfront fees.
Instalment Payments
Loans are typically repaid to the lender monthly. Usually, your monthly payment is fixed, so you always know how much will be deducted from your account each month.
Term
The length of time you have to pay back the loan in full is known as the loan term. The length might range from a few weeks to several years, depending on the type of loan.
What are Secured Loans?
For secured loans, the lender often places a tangible item, such as your home or car, as collateral in case you are unable to repay the loan in full. The interest rate is determined by the asset, your credit history and score, and the lender. Generally speaking, secured loans have lower interest rates than unsecured ones.
What are Unsecured Loans?
Your interest rate for unsecured loans is determined by several financial factors, including your income, credit score, and total debt. The lender can sue you in court to recover the money if you don’t repay the loan as arranged. Nevertheless, it cannot seize any of your assets if you don’t. Also, the lender has the right to report the default to the credit bureaus, which will damage your credit rating and limit your future loan options.
Compared to secured loans, unsecured loans often have higher interest rates and lesser loan amounts.
You also have the option of applying for a loan with a fixed or variable interest rate.
What is a Fixed interest?
With a fixed interest rate, both the interest rate and the instalments on your loan are set and unchanging. Your monthly repayment amount will be accurate and deducted from your bank account each month.
What is a Variable Interest?
Your car loan repayments may change if interest rates change with a variable rate. You will have to make larger payments if interest rates increase. Your repayment obligations will also decrease if interest rates drop.
