When unexpected expenses arise or you’re planning a big purchase, personal loans in Australia can be a smart way to access extra funds. From consolidating debt to funding a renovation or covering travel costs, personal loans give Australians flexibility and financial breathing space.
In 2025, the lending market looks different from just a few years ago, with digital lenders, flexible repayment options, and competitive interest rates reshaping how Australians borrow. Understanding how personal loans work — and how to choose the right one — can save you time, money, and stress.
What is a Personal Loan?
A personal loan is money borrowed from a bank, credit union, or non-bank lender that you repay in set instalments over an agreed term, usually one to seven years.
There are two main types:
- Secured personal loans: Backed by an asset like a car or property. These generally come with lower interest rates but higher risk if you can’t repay.
- Unsecured personal loans: Not tied to any asset. These are quicker to access but often come with slightly higher rates.
Why Australians Use Personal Loans
In 2025, personal loans remain one of the most popular forms of credit. According to Reserve Bank of Australia (RBA) data, Australians are increasingly using personal loans for:
- Debt consolidation – rolling multiple debts into a single, lower-rate loan
- Home renovations – funding upgrades without refinancing a mortgage
- Vehicle purchases – buying cars, motorcycles, or boats
- Medical expenses – covering unexpected health costs
- Travel or lifestyle – funding special trips or events
Key Trends in 2025
- Digital-first lending
Fintech lenders and online applications mean approval times are faster than ever, with many borrowers receiving same-day decisions. - Rate competition
With inflation easing, interest rates for personal loans in Australia are stabilising. The best unsecured personal loans are sitting around 7–10% p.a., while secured loans can be lower. - Flexible features
More lenders are offering features like extra repayments without penalties, redraw facilities, and customised loan terms. - Responsible lending focus
Lenders are tightening checks to ensure borrowers can comfortably repay, especially after cost-of-living increases in recent years.
How to Choose the Right Personal Loan
When comparing personal loans, look beyond just the advertised interest rate. Key factors include:
| Factor | What to Consider |
|---|---|
| Interest Rate (p.a.) | Compare both fixed and variable options. |
| Comparison Rate | Includes fees, giving a truer picture of costs. |
| Loan Fees | Application, monthly, or early repayment fees. |
| Loan Term | Shorter terms mean less interest overall but higher repayments. |
| Flexibility | Ability to make extra repayments or redraw. |
Personal Loans vs Credit Cards
Personal loans typically offer lower interest rates than credit cards and give borrowers a clear repayment schedule. If you’re carrying a large credit card balance, consolidating with a personal loan can reduce interest costs and help you pay off debt faster.
How Cockatoo Can Help
At Cockatoo (cockatoo.com.au), we help Australians compare and secure the right personal loan for their needs. Whether you’re consolidating debt, planning a renovation, or making a big purchase, our team makes the process simple, transparent, and stress-free.
Conclusion
Personal loans in Australia remain a powerful tool for managing finances in 2025. With more lenders and flexible options available, borrowers have greater choice than ever. The key is understanding your needs, comparing products carefully, and choosing a loan that fits your financial situation.
Cockatoo is here to guide you every step of the way. Visit cockatoo.com.au to explore your options and make smarter borrowing decisions today.
FAQs
1. What can I use a personal loan for in Australia?
Almost anything, from consolidating debts and home improvements to medical bills or travel. Lenders usually restrict use only for illegal or speculative purposes.
2. Are personal loans better than credit cards?
If you need a set amount with structured repayments, personal loans usually offer lower interest rates and clearer repayment timelines compared to credit cards.
3. How much can I borrow with a personal loan?
Most lenders in Australia offer between $2,000 and $75,000, depending on your income, credit history, and whether the loan is secured.
4. What is the average interest rate on personal loans in 2025?
Unsecured loans typically range between 7–10% p.a., while secured loans may start lower. Your rate depends on your credit score and lender choice.
5. How can Cockatoo help me find the right personal loan?
Cockatoo compares lenders and guides you through the process so you can confidently choose a loan that suits your goals and budget.
