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Maximum charges: 20% Establishment fee and 4% monthly fee (Comparison rate 199.43%) based on $1000 repaid over 6 months. Illustrative example: Loan amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly instalments of $57.60. Maximum charges: 20% Establishment Fee & 4% Monthly Fee. In comparison rate terms, the maximum comparison rate may be as high as 199.43%.
WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. The information on this web page is general information. The information does not take into account your objectives, financial situation or needs. Credit criteria, fees, charges, terms and conditions apply. Products and rates displayed are subject to the individual borrower's credit assessment. Examples only provide an estimate and are used for illustrative purposes only, not an offer for credit. The amount you can borrow, the interest rate and fees you receive along the product you qualify for may vary.
Viva Payday Loans > Bank Loans

Bank Loans

There are many lenders in Australia providing loans with varying features, rates, and terms, and it can be a daunting task to select a loan product that is most suitable for your needs. Ideally, borrowers are looking for a loan product that provides them with adequate funding, a low-interest rate, affordable repayment terms, and great flexibility. In most cases, and if eligible, borrowers find bank loans to fit these criteria. 

Borrowing from a bank has certain advantages over other lenders operating in the market. There is also an added convenience while borrowing for those who already maintain an account with a bank, as the loan approval process may be expedited due to the borrower’s existing relationship with the bank. 

There aren’t many differences when it comes to personal loans provided by banks and other financial service providers. But the differences that do exist stem from the relatively large size of the bank in terms of its asset base, which allows it to provide certain advantages to its customers such as offering multiple products as a package, a superior customer service team, access to a vast branch network, and online banking services. 

Types of Bank Loans

There are a number of personal loan products you may be able to acquire through a bank, depending upon your needs and eligibility. 

Secured Bank Loan

A secured bank loan is suitable for those who are looking for funding to purchase a personal asset, such as a car, and the loan amount is only allowed to be used for this purpose. The bank keeps the asset as collateral against the loan amount, hence it can seize the asset and sell it off to recover the outstanding loan amount in case the borrower defaults on the loan. 

Keeping the asset as security significantly reduces the risk for the bank, so the interest rate and fees applied on the loan is also lower. Once the entire loan amount has been repaid, the ownership of the purchased asset is transferred to the borrower. 

Unsecured Bank Loan

Many borrowers opt for unsecured bank loans because these loans don’t come with any restriction on the way it may be used, provided the loan amount is only used to pay for personal expenses and not for any commercial purposes.

Tip: Some banks may disallow borrowers from using an unsecured loan to pay for certain expenses, but usually, this list is limited. 

Unsecured bank loans don’t require borrowers to pledge any personal assets as collateral but also come with a higher interest rate and fees, compared to secured bank loans, due to the higher risk borne by the lender. Also, the lending criteria imposed on this type of loan are stricter compared to a secured loan. 

Personal Overdraft

Bank account holders have access to a personal overdraft facility that allows them to withdraw more funds from their transaction account than are actually available. A monthly fee is payable for using an overdraft facility, and the bank also specifies a limit on the total amount that may be overdrawn at a time. To repay, borrowers simply need to make a deposit in their account and the amount is first used to settle the overdraft balance.

Bank Credit Line

The credit line service offered by a bank is also available to bank customers. A separate credit line account is established in the borrower’s name, with a predefined limit that is usually much larger compared to the one allowed under a personal overdraft facility. Borrowers can withdraw from this account up to the approved limit, and interest rates and charges are applied only on the withdrawn amount for the period that it remains withdrawn. 

Debt Consolidation Loan

Bank loans are especially popular for debt consolidation purposes and a specific debt consolidation loan is typically a preferred option over a payday loan or other type of short term loan. If you have multiple outstanding loans and debt balances, such as credit cards and car loans, you might want to merge them all together into a single loan product so that its easier to manage. This way, borrowers only have to worry about making repayments on a single loan rather than multiple loans at the same time. 

Advantages and Disadvantages

There are a few advantages and disadvantages of taking out a bank loan. 

Advantages Disadvantages
Banks offer multiple loan/credit products under one roof, making it easier to compare different products and select one that best suits your needs. You may be charged a higher interest rate and associated fees by the bank compared to some smaller lenders operating in Australia.
Due to their size, the terms and conditions offered by banks on their loan products are more flexible compared to small lenders. It might be difficult for you to get approved by a bank for a loan/credit product, especially if you have a bad credit history. This is because banks have tough eligibility criteria when it comes to debt products. 
Maintaining a long-term relationship with the bank can earn you some advantages when it comes to securing loan products, such as easier approval of loan applications due to an ongoing relationship of trust with the bank.  

Application Process

If you have decided to borrow from a bank, the first step is to find the loan product you require. This usually entails conducting research about the loan products being offered by different banks in Australia and then selecting one that is offering you the amount you require at an affordable rate with reasonable terms.

Then, it is time to apply for the loan. Many banks offer loan applications online, but if that’s not the case, you can always apply in-branch or over the phone. During the application process, every bank will have a different information requirement, and you might need to submit some documents as well especially if you are not an existing customer of the bank. 

Once the application has been submitted, the bank will review it and present you with a decision as per the stipulated timeline. 


Should I apply for a bank loan with my existing bank?

Many people prefer to borrow from their existing bank but it’s always a good idea to compared loan products among different banks, as your bank might not be offering the best deal in the market. 

Are bank loans cheaper than personal loans offered by small lenders?

Maybe. As banks have a larger asset base and stricter lending criteria, they have a lower risk when they offer loan products and, hence, might charge a lower interest rate compared to small lenders.

Can I apply for a bank loan if I have a bad credit history?

Maybe, although most banks do not accept loan applications from borrowers with a bad credit score.