Personal Loans provide top option for borrowers
“Loan term beats interest rates”
November 3, 2009
Personal Loans can be a smarter choice for getting out of the debt trap as common alternatives such as credit cards or topping up the mortgage may be more expensive, taking years longer to pay off.
To view this content you’ll need to download the latest version of Adobe Flash. You can download it for free by clicking here or on the icon below.
Aussie has introduced a brand new tool for consumers to quickly analyse and compare the total interest cost of various finance types to a personal loan, called the Debt Comparison Calculator.
Aussie founder and executive chairman John Symond said “We have developed the personal loan calculator to help consumers understand what the impact could be of taking on debt but then not paying it off as quickly as possible.”
“We want to assist consumers to make informed decisions about what form of debt they take on when buying a car or other “bigger ticket” purchases.
“By going to our website and plugging in the amount of their purchase or debt, consumers can compare what the total interest cost of an Aussie Personal Loan could be versus putting the same amount on an average credit card or mortgage and only making minimum repayments.”
Mr Symond said increasing speculation about rising interest rates would see more consumers jumping at the opportunity to secure a personal loan, which has a fixed rate over a fixed term.
“The personal loan can be a smarter choice for consumers as it is a vehicle to consolidate multiple debts for ease of management and potentially earlier payment than many alternatives”, he added.
We all like to think that we pay off our credit cards every month or pay period however the reality is that the majority of people build up quite significant debts on their credit cards and then have these hanging over their heads for a long time with no real commitment to pay them off as quickly as possible.
“It may not make financial sense to be paying the minimum repayments on a handful of credit cards and not making any headway. Some borrowers are being smart by adding the loan amount to their mortgage, usually the lowest interest rate option and then setting up a fixed period for its re-payment. The real trap is in just adding the amount to a 30 year mortgage period”, he added.
If you find yourself in the habit of only making minimum repayments then you are likely to find that loan term easily beats interest rates when it comes to the reducing the total cost of the loan.
For example, a personal loan of $25,000 taken over five years at an interest rate of 13.79 per cent would require a monthly payment of $594, with a total interest cost of $9,739. While borrowing the same amount at the average 5.78 per cent variable home loan rate requires a much lower monthly repayment of $146 spread out over 30 years, the total interest cost could jump to $27,693.
Call the Aussie Contact Centre on 13 13 55 to apply for an Aussie Personal Loan or go to www.aussie.com.au/debtcalculator to test the Debt Comparison Calculator.
For more information or to request an interview with John Symond please call:
For further information, please call:
Brooke Stoddart
Senior Manager – Public Relations
Aussie
02 8297 0381 or 0438 677 588
Feedback