Australian borrowers are taking advantage of the record-low interest rates by consolidating or transferring their personal debts into a personal loan.
According to new research by Aussie Home Loans, 58 per cent of its customers are using personal loans to consolidate their debts built up in credit cards and other loans, with the average loan size worth $20,000.
The research revealed Aussie customers are also using personal loans for car purchases or travel.
Executive chairman John Symond said personal loans are starting to regain their popularity as consumers begin to understand that the common alternatives – credit cards or adding to the mortgage – can be more expensive over the long term and take longer to pay off.
“The personal loan is coming back into fashion as it is a vehicle to consolidate multiple debts for ease of management and earlier repayment than many alternatives,” he said.
“It doesn’t make financial sense to be paying the minimum repayments on a handful of credit cards and not making any headway in paying off the principal, when personal loan interest rates are generally lower than credit card interest rates.”
Aussie personal loans are now priced at 12.99 per cent for loan terms up to seven years.
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