Personal Loans Statistics in Australia for 2021

personal loans statistics

Whether we’re aiming to live our best lives, settle old debts, or handle unexpected expenses, we frequently find ourselves borrowing money now to pay it back later. But this is tricky terrain and many find themselves in an endless loan loop. 

Still, how can you say no to a dream honeymoon, a newly furnished kitchen, or a swanky new ride? Personal loans are a fact of modern life and it’s better to be savvy than sorry!

To learn more about how personal loans work, check out these personal loans statistics.

10 Facts of Interest on Personal Loans in Australia

  • The value of the personal loans market in Australia was $173 billion in 2019
  • Some 40% of Gen X Australians use personal loans to consolidate debts
  • As of 2020, the average interest rate for a personal loan is 14.41%
  • The banks’ command of the personal loan market has fallen to 72%
  • The average personal loan amount in Australia is $15,000-$16,000
  • Four in five Australians are not bothered with their credit score
  • The debt-to-income ratio in Australia was 185% in 2020
  • The average home loan debt is $456,000
  • Over a third of Australians struggle with repaying their debts 
  • 10% of Australians put a credit card or loan payments on hold due to COVID

Personal Loans Statistics

1. The value of the personal loans market in Australia is over $170 billion.

(Wonder)

As of 2019, the total outstanding loans of Australians amounted to $173 billion. In only 3 months (June-August 2019), the personal loans amount increased by $30 billion.

2. Around 8 million Australians took out loans during 2019.

(Wonder) (Fool)

Close to 40% of the adult Australian population took out personal loans in 2019. For comparison, only 6% of Americans took out a personal loan in the same year.

Uncle Sam can’t touch Oz!

3. The average personal loan amount in Australia is $15,000-$16,000.

(Wonder)

On average, Aussies take out personal loans worth something between $15,000 and $16,000. Those with families take out loans to the tune of $17,289 on average, while couples are slightly “more modest”, loaning an average of $14,946. The average for singles is $13,966. 

4. As of 2020, the average interest rate for personal loans is 14.41%.

(Reserve Bank of Australia)

According to RBA statistics, since January 2019 the average variable interest rates for a personal loan have been a steady 14.41%. The average fixed personal loan rates were 12.46% in Q1 of 2020. 

5. In April 2021, new loan commitments for fixed-term personal loans rose by 4.8%.

(Australian Bureau of Statistics)

The value of new loan commitments for fixed-term personal loans increased by 4.8% during the month of April 2021. In comparison, housing loans rose by 3.7% in the same month and 68.2% throughout the year, while the value of new loan commitments for business construction decreased by 10.5%.

6. Banks have been losing ground to non-bank and online lenders for a decade. 

(Wonder)

The structure of the personal loans market is gradually changing. Back in 2010, bank loans comprised 86% of the market, whereas other lenders were limited to 14%. With time, non-bank lenders, such as credit unions and online lenders, took up a bigger chunk of the lending market and have now doubled their share to 28%.

7. Traditional Australian lenders – the “Big Four”.

(Canstar Blue) (Mozo) (NAB) (ANZ) (Westpac) (Commonwealth Bank) (Rate City)

The leading traditional lenders in Australia are the commonly known “Big Four” banks:

  • NAB (National Australia Bank) is the best unsecured personal loans lender for three years (2019, 2020 and 2021). Both variable and fixed interest rates are 6.99%-18.99% per annum, while comparison rates range from 7.91% to 19.83%. The bank offers between $5,000 and $55,0000 with a term between one and seven years.
  • ANZ (Australia and New Zealand) – lets you borrow $3,000-$40,000. The standard interest rate is 12.90% per annum and the term is anywhere from 6 months to 7 years.
  • Westpac – at Westpac, you can get an unsecured personal loan fixed at an interest rate of 9.99% and a comparison rate of 11.16% p.a. The secured Westpac car loan allows you to borrow larger sums of money (up to $100,000), which is twice the limit customers can get with an unsecured loan ($4,000-$50,000). You can repay your loan over 1 to 7 years. 
  • Commonwealth Bank – its fixed rates range from 9%-16% per annum with a comparison rate of 9.90%-16.86%, whereas the variable rates are 11.5%-18.5% p.a. with comparison rates between 12.38%-19.34% p.a. You can get an unsecured loan of  $4,000-$50,000, or a secured car loan of $10,000-$100,000 which you can repay over 1-5 years.

What you get with these and other banks is a sense of security and face-to-face service, which can cost you more in fees.

8. Some non-traditional lenders in Australia.

(Wonder) (Plenti) (MoneyPlace)

Due to aggressive marketing campaigns and attractive rates, non-traditional lenders have increased their foothold in the Australian market in recent years. Here’s a cursory overview of the financial products they provide.

  • SocietyOne – offers rates between 5.95% and 10.45% per annum (with comparison rates between 5.95% and 12.83% p.a.). The amount borrowed can range from $5,000-$50,000 and be repaid over 2, 3, or 5 years.
  • Plenti – the company provides customers with both secured and unsecured personal loans which can be repaid over 1-7 years. The loan amounts range from $2,001 to $50,000, with interest and comparison rates starting at 6.39% p.a.
  • MoneyPlace – here you can get a loan of $5,000 to $50,000 with terms of 3.5 to 7 years. The interest rates range between 6.45% and 26.99%, with a comparison between 6.45% and 28.65%.

These are just some of the large money-lenders across Australia. Nowadays, there are lenders around every corner, which says plenty in itself.

9. How many personal loans can you take out at once?

(MoneyExpert)

In times of need, many of us have wondered how many personal loans can you take out at once? As it turns out, some Australian banks and online lenders allow parallel lines of credit. You can even borrow from more than one bank at the same time, but you should consider all the associated costs. The lender’s comparison rates often presume an excellent credit history – if yours is not quite there, the loan interest rate might be higher – and are then compounded by additional terms, conditions, fees, and charges.

According to the online lender MoneyExpert, the key risks of having more than one loan are 

  • The impact on your credit score
  • Rising debt levels
  • Becoming trapped in a cycle of debt

10. Beware: Changes in loan conditions could save or cost you hundreds of dollars. 

(Mozo)

As with any other type of goods or services, it pays to shop around and do a careful personal loans comparison before you plunge for a financial product. Comparing the total costs and fees for the same type of credit across different banks or different years could tell you whether you are getting a good deal. You may discover that, for example, the total cost of a 3-year unsecured personal loan of $10,000 from the same bank diminished by as much as $1,066 between 2019 and 2020. 

Personal Loans Borrower Profile

11. Over a third of Australians struggle with repaying their debts. 

(ABS News)

In terms of the various types of consumer debts, Australians hold the world’s second-highest household debts, behind Switzerland. According to 55,000 respondents of the Australia Talks National Survey, this is a nationwide problem. In addition, 37% of Australians have a hard time paying off their debts, and as much as half of the millennials report they struggle with debt. 

12. Almost 40% of Gen X Australians take out loans to consolidate debt.

(Wonder)

One of the primary reasons for a personal loan in Australia is debt consolidation. This holds for close to a third of all borrowers: 37.1% of Millenials, 37.4% of baby boomers, and as much as 39.6% of those aged 41-56 (the so-called Generation X) apply for personal loans to consolidate their debts. 

13. One in five baby boomers renovate their home with a personal loan.

(Wonder)

Renovating usually means a sizable investment of time and money. Home improvements are the second most popular reason for taking out a personal loan in Australia.  20% of those currently aged 57-75 (the so-called baby boom generation) take out a personal loan to make this move. The same is true for 17.2% of Generation X Australians. 

14. One in seven millennials use personal loans to buy a car. 

(Wonder) (ABS News)

Another common reason why Aussies borrow funds is financing the purchase of a new car. Somewhat understandably, the age group most keen on getting a new ride are millennials, with 14.1% taking out a personal loan for this reason. In general, the new loan commitments for road vehicles increased by 3.6% in April 2021.

15. All age groups are alike when it comes to holiday and travel loans.

(Wonder)

Who can say no to good times and new destinations? Both younger and older generations love travelling and use loans to achieve their dreams in equal numbers: 8.7% of Millenials, 7.8% of Gen X-ers, and 8.7% of baby boomers in Australia take out personal loans in order to travel, according to 2021 data. 

16. Australians rarely use personal loans for investing.

(Wonder)

Investing is probably the last thing someone thinks of when getting a personal loan. Weddings – yes, emergencies – of course, renovations and moving costs – sure, but investing? Not so much. Only 1.8% of millennials, 1.4% of Gen X, and 1.1% of baby boomers use their loans to secure a better cash flow in the future.

17. The average amount Gen X borrows is over $16,000.

(Wonder)

The highest average amount borrowed among all age groups is that of 41-56 year-olds at $16,793. The average amount of money borrowed for baby boomers is $15,676, and $14,832 for Millenials (25-40 year-olds).

18. Four out of five Australians don’t bother checking their credit score.

(Equifax)

79% of Australians are not bothered with their credit score and 78% have never checked their credit report. This seems to go against the advice of professionals, who recommend regular checks of your credit score and related personal information.

19. Aim for a credit score above 800.

(Canstar)

A good credit score makes loans cheaper and your life that much easier. But what is a good credit score? You’re doing well if your credit score is between 666 and 755. A credit score of above 756 is considered very good, and anything above 841 is excellent.

On the other hand, if your credit score is below 505, you could struggle to get various credits and loans approved, as your rating is considered below average. 

20. The average credit score for Australians aged 55+ is 735.

(Credit Savvy) 

Worryingly, younger generations in Australia are way below the national average credit score. Millennials in particular have the lowest average credit scores among all age groups – 564, while 25-34 year-olds are rated at 610 on average. The ratings improve as we go up the age brackets, so for 45-54 year-olds, the average credit score is 682, whereas those 55 and over boast the highest credit score of all at 735, much higher than the national average of 649.

Personal Loans Debt Statistics

 21. In 2020, Australia’s debt-to-income ratio was 185%.

(CoreLogic)

Levels of household debt in Australia have been steadily climbing for the past 30 years, with housing debts making up the majority of the figure. To illustrate, the ratio between the household debt and the annual income was 68% in June 1990, growing to a worrying 188.5% by June 2019. But it is a good sign that the value of the assets owned – the value of the real estate property bought with that debt – grew at an even higher rate and household net worth is at a record level.

22. The average home loan debt is $456,000.

(Illion)

Estimates indicate there are 10.3 million housing properties in Australia, worth a grand total of $6.6 trillion. Aussies are currently repaying 6 million home loans worth $2.1 trillion. In the two years between 2018 and 2020, Australians had an average home loan debt of $456,000.

23. The average small business in Australia owes $18,624.

(Mozo)

Debt is overdue for 62% of Australian small businesses and, on average, each owes about $18,624. Interestingly, this varies widely across states. For example, New South Wales business debt is $4.4 billion, of which 78% is overdue. In West Australia, on the other hand, the debt amount is $236 million, with only 22% being overdue.

Personal Loans Trend

24. One in ten Australians put credit or loan payments on hold due to COVID.

(RoyMorgan)

With almost a million losing their jobs during the pandemic, the personal loans market and the general finances of Australians changed dramatically. 27.3% of the population made changes to their finances due to the impact of COVID-19, 10.3% put their credit card or personal loan payments on hold or reduced repayment plans, while 10% put their mortgage on hold for a period.

Bottom Line

Aussies seem to need an extra “lending hand” at the moment, which explains the many loan providers all over the country. New loan commitments have risen in recent years and so have loan balances. To keep track of the situation, remember to always read the small print and our detailed personal loans statistics. 

Sources:

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