Types of Loans in Australia: What You Need to Know
Navigating Australia's financial landscape can be challenging, especially when you're trying to find the right loan for your needs. Whether you're looking to buy your first home, fund your education, or need some quick cash to tide you over, understanding the various types of loans available can help you navigate your options with confidence.
We’ll break it all down in this article—and also explain how Credit24 offers quick, online personal loans with flexible features and a straightforward application process, tailored to your specific needs, with decisions often made within minutes*.
Different types of loans
The Australian financial market offers a wide variety of loan products designed to cater to different needs, circumstances, and financial goals. Each loan type comes with its own features, eligibility requirements, and repayment terms.
Understanding these differences can help you choose the best financing option for your situation, so let’s get started.
1. Personal loans
Personal loans are versatile financial products that allow you to borrow a fixed amount of money to cover a wide range of legitimate expenses. Unlike specific loans tied to particular purchases, personal loans give you the freedom to use funds as you see fit.
When you take out a personal loan, you receive a lump sum that you repay with interest over a predetermined period, typically between 1 and 7 years. Repayments are usually made in fixed instalments, making it easier to budget.
You can usually use a personal loan for purposes such as:
- Buying a car
- Consolidating debt
- Going on holidays
- Financing a wedding
- Paying for medical expenses
- Covering other personal costs
Different types of personal loans:
- Secured personal loans:
These require you to offer an asset (like a car or savings) as collateral, which the lender can claim if you default. Because they’re less risky for lenders, secured loans typically offer lower interest rates. - Unsecured personal loans:
These don’t require collateral, making them accessible to more borrowers. However, they usually come with higher interest rates to offset the increased risk to lenders.
Credit24 offers quick and easy personal loans tailored to your needs. Our simple online application takes around 10 minutes, and you could receive funds almost immediately after approval. Whether you need to cover unexpected expenses or want to consolidate debt, Credit24’s personal loans can give you the flexibility you need.
2. Home loans
Home loans, also known as mortgages, are long-term loans designed specifically for property purchases. Given the significant amount borrowed, these loans typically have longer repayment terms, often spanning 25 to 30 years.
Different types of home loans:
- Owner-occupier loans: For people buying a property to live in, usually with more favourable terms.
- Investment property loans: For properties purchased as investments, often with different rates and tax implications.
- Construction loans: Release funds in stages as building progresses.
- Refinance loans: Replace an existing mortgage with a new one, potentially with better terms.
- Low-doc loans: Suitable for self-employed borrowers who may not have standard income documentation.
- Split loans: Combine fixed and variable interest components.
- Package loans: Bundle your home loan with products like credit cards or transaction accounts, often with fee discounts.
- First home buyer loans: Specifically designed for first-time buyers, sometimes with government assistance.
- Bridging loans: Short-term finance to help you buy a new property before selling your existing one.
3. Home equity loans
Home equity loans allow homeowners to borrow against the equity they’ve built in their property—the difference between the property’s current market value and the remaining mortgage balance.
Different types of home equity loans:
- Fixed-rate home equity loans: Lump sum with fixed rate and fixed repayments.
- Home Equity Line of Credit (HELOC): Revolving credit facility up to an approved limit.
- Second mortgages: Additional loans taken while an existing mortgage is still in place.
- Reverse mortgages: Allow older homeowners to access equity without selling or making monthly repayments.
- Cash-out refinancing: Replace your existing mortgage with a larger loan, receiving the difference in cash.
- Investment property equity loans: Use equity from an investment property to fund further investments.
- Home improvement equity loans: For renovations or additions intended to increase property value.
- Major renovation equity loans: Larger loans for significant remodels or extensions.
4. Student loans
Student loans help fund education and training costs. In Australia, several government schemes support students in financing their education without requiring upfront payment.
Most Australian student loans are income-contingent, meaning repayments only begin once your income reaches a certain threshold, and are collected through the tax system.
Different types of student loans:
- HELP (Higher Education Loan Program):
Assists eligible students with their student contribution or tuition fees at universities or other higher education providers. - VET Student Loans:
Available for diploma-level and above vocational qualifications in priority areas. - OS-HELP (Overseas Study):
Supports eligible students who want to complete part of their course overseas. - SA-HELP (Student Services):
Helps eligible students pay for student services and amenities fees. - Private student loans:
Offered by banks and financial institutions for students who don’t qualify for government loans or need extra funding.
5. Business loans
Business loans provide funding for starting, expanding, or maintaining a business. They vary in terms, amounts, and purposes to suit different business needs.
Different types of business loans:
- Term loans: Lump sum repaid over a fixed period with regular repayments.
- Equipment finance: For purchasing business equipment, often using the equipment as security.
- Commercial property loans: For buying business premises or commercial investments.
- Line of credit: Flexible access to funds up to a limit, similar to a credit card.
- Invoice financing: Borrowing against unpaid customer invoices.
- Merchant cash advances: Upfront cash repaid as a percentage of future card sales.
- Business overdrafts: Overdraw your business account up to a set limit.
- Working capital loans: Short-term loans for day-to-day operating costs.
- Start-up loans: For new businesses without a strong financial track record.
6. Vehicle finance
Vehicle finance helps individuals and businesses purchase cars, trucks, or other vehicles without paying the full amount upfront.
Types of vehicle finance:
- Car loans: Traditional loans secured by the vehicle.
- Novated leases: Three-way agreements between employer, employee, and finance company with potential tax benefits.
- Chattel mortgages: Commercial finance where the borrower owns the vehicle and it serves as security.
- Commercial hire purchase: Use the vehicle while paying it off, with ownership transferring after the final payment.
- Operating leases: Long-term rentals where the finance company retains ownership.
7. Credit-builder loans
Credit-builder loans are designed to help people establish or improve their credit history. The borrowed money is often held in a secure account until the loan is fully repaid.
Types of credit-builder loans:
- Secured credit-builder loans: Backed by savings accounts as collateral.
- Unsecured credit-builder loans: No collateral, generally higher interest rates.
- CD-secured loans: Use term deposits/certificates of deposit as security.
- Non-bank ADI builder loans: Offered by some non-bank ADIs, sometimes with more flexible criteria.
8. Australian Government loans
The Australian Government offers various loan programs to support specific groups or purposes, often with more favourable terms than commercial loans.
Types of government-related support and loans:
- First Home Owner Grant (FHOG) & related schemes: Assistance for eligible first-home buyers.
- Farm loans: Support property purchases, improvements, or hardship periods (e.g. drought).
- Small business loans and guarantees: Government-backed support for small business growth.
- Disaster recovery loans: Assistance for people and businesses affected by natural disasters.
- Indigenous business loans: Targeted support for Aboriginal and Torres Strait Islander entrepreneurs.
9. Short-term loans
Short-term loans provide quick access to smaller amounts of money, usually repaid within weeks or months. They typically have higher costs due to their short terms and convenience.
Types of short-term loans:
- Payday loans: Small, very short-term loans, usually high cost and tightly regulated.
- Small amount credit contracts (SACCs): Loans under $2,000 with terms between 16 days and 1 year.
- Medium amount credit contracts (MACCs): Loans between $2,001 and $5,000 with terms between 16 days and 2 years.
- Overdrafts: Allow your account to go into a negative balance up to a limit.
10. Debt consolidation loans
Debt consolidation loans combine multiple debts into a single new loan, potentially simplifying repayments and reducing overall interest costs.
They can be secured or unsecured, and can be used to pay off personal, credit card, or even some business debts.
Common types of consolidation structures:
- Secured debt consolidation loans: Use an asset (often a home) as collateral.
- Unsecured debt consolidation loans: No collateral, usually higher rates.
- Home equity debt consolidation: Use home equity to roll other debts into your mortgage.
- Balance transfer loans/cards: Move existing debts to a new product, often with a lower or introductory rate.
- Personal loan consolidation: Use a new personal loan to pay out other loans and cards.
Refinancing options
Refinancing involves replacing an existing loan with a new one—ideally on better terms. This can apply to:
- Mortgages
- Personal loans
- Car loans
- Business loans
People usually refinance to:
- Lower their interest rate
- Change between fixed and variable rates
- Access equity
- Adjust loan terms (shorter or longer)
A different way of categorising loan types
Apart from purpose, loans can also be grouped by how they’re structured and priced. For example:
Interest rate type
- Fixed-rate loans – stable repayments.
- Variable-rate loans – rates and repayments can move up or down.
- Split loans – part fixed, part variable.
- Honeymoon/intro rates – low for a period, then revert to a higher rate.
- Comparison rates – show interest plus most fees for better comparison.
Term duration
- Short-term: a few weeks up to 12 months.
- Medium-term: typically 1–5 years.
- Long-term: 5+ years (commonly used for mortgages).
Documentation level
- Full-doc loans – standard income and financial proof.
- Low-doc loans – alternative verification (often for self-employed).
- No-doc loans – minimal documentation, typically higher risk and cost.
Loan-to-value ratio (LVR)
- Low LVR (<80%) – often better rates, no lenders mortgage insurance (LMI).
- Standard LVR (80–90%) – may require LMI.
- High LVR (>90%) – higher risk, often higher rates and insurance costs.
- Not applicable for unsecured loans (no asset security).
Repayment structure
- Principal and interest – reduce both balance and interest over time.
- Interest-only – only interest for a period, then principal starts.
- Balloon payment loans – smaller regular repayments with a larger final payment.
- Lines of credit – flexible drawdown and repayment.
- Pay-as-you-go – repayments that adjust to income or cash flow.
Borrower type
- Individual loans
- Joint loans
- Business / company loans
- Trust loans
- SMSF borrowing (under specific regulations)
Approval basis
- Credit score-based
- Income-based
- Asset-based (secured heavily by collateral)
- Mixed criteria (most common).
Funding source
- Banks
- Non-bank lenders and credit unions
- Government programs
- Peer-to-peer platforms
- Private lenders
Fee structure
- Application fees
- Ongoing account-keeping fees
- Early exit / break costs (especially for fixed rates)
- “No-fee” loans with potentially higher rates instead
Security type
- Secured loans – backed by collateral.
- Unsecured loans – no collateral, higher risk and usually higher rates.
- Partially secured – a mix of both.
Loan features
- Redraw facilities
- Offset accounts
- Extra repayment options
- Repayment holidays in hardship
- Portability (moving a mortgage to a new property)
Credit24: Easy personal loans tailored to your needs
At Credit24, we understand that when you need a personal loan, you want a straightforward process with quick results.
Our online application takes around 10 minutes to complete, and once approved, funds can be transferred to your account within 60 seconds*. This makes Credit24 a great solution when you need financing quickly for unexpected expenses or time-sensitive opportunities.
Credit24 also offers a transparent fee structure, so you’ll know exactly what your loan will cost, with no hidden charges or surprise fees. Our fixed repayment amounts help you plan your budget with confidence, and we allow early repayments without penalties, potentially saving you money on interest.
Whether you're looking to treat yourself to a holiday, fund home improvements, cover medical expenses, or finance a special occasion, Credit24 offers personal loan solutions designed around your needs.
