A personal loan in Australia is a loan which can be used for a large number of purchases.

Personal loans usually have a smaller interest rate than credit cards and a larger interest rate than mortgages.

Australian consumers use personal loans to buy luxuries as well as to pay off bills. A debt consolidation loan is the name that is given to a personal loan which is used to consolidate your current debts and bills into one loan.

If you have multiple credit cards then this type of personal loan can reduce the amount of interest that you pay immediately.

Some Australians take out personal loans for holidays or to pay medical expenses.

Some points to consider when applying for a personal loan are

• Be honest with the lender about what you'll use the loan for
• Read the fine print
• Make sure the loan is in your best interests, not the lenders

A personal loan can be for any length of time but usually average from one year to three years. This allows you to pay off the money borrowed in a much shorter time than a mortgage (which is more often ten, fifteen years or more).

So, what's the verdict on personal loans Australia?

If you want to make use of a personal loan, carefully analyses your financial situation and what you think your financial situation will be over the term of the loan and after seeing how much interest you will be paying for the privilege of having the personal loan, work out if it's what you want to do.