How do personal loan repayments work?

The way personal loans are usually structured means that you’ll have a clear idea of how much repayments will be, as well as the loan’s length and end-date. Right from the outset, you can always see where you stand.

Repayments for each loan are based on a few factors, including the amount borrowed, the term of the loan and whether the interest rate is fixed or variable. The amount of money you can access may depend on the type of loan.

At Plenti, we offer fast, fair, flexible loans. You can borrow between $2,001 to $50,000 over 1 to 7 years. There are no monthly or early repayment fees. This gives you the freedom to save more by making extra repayments on your loan. Finally, the interest rate you receive is 100% tailored to you. The better your credit history, the better your final rate will be.

While most personal loan repayments are monthly, you may also get a choice to pay them weekly or fortnightly. The frequency of payments and the interest rate will determine how much your repayments will be.

How do online personal loans work?

Today’s consumers are adept at using online services and managing finances is no different. Today we can transfer money between accounts, pay utility bills, pay credit card bills and apply and manage loans completely online. 

With mainstream financial providers, you’re usually faced with a paperwork rollercoaster ride – a rigmarole of protocol and red tape before you hear of approval. With an online personal loan you not only get approval the same day of your enquiry, but benefit from having the funds you requested the same day as well. If not the same day, you can be assured that it’ll be a lot faster than a loan applied for through mainstream counterparts.

Can I refinance my personal loan?

Refinancing a personal loan means obtaining a new loan and using the funds to pay off an existing personal loan. This strategy can save you money if you qualify for a lower interest rate on the new loan. There also may be other situations where it makes sense to refinance such as:

  • Your credit has improved. Borrowers with good (690 to 719) or excellent credit (720 and higher) typically receive lower rates on personal loans. If you’ve kept up with on-time payments toward your first loan and your credit score has grown, then you may receive a lower rate on a new loan and refinancing could save you money.
  • You need lower payments. Refinancing can extend your repayment term, lowering your monthly payment. This can boost your cash flow, which is the total amount of money left over each month after all expenses are paid. You can then use the extra cash to repay higher-cost debts or start an emergency fund. (Bear in mind that extended terms mean more total interest and longer debt time.)
  • You want to pay off the loan faster. If higher monthly payments fit into your budget, you can refinance to a shorter-term loan, reducing your total interest costs and allowing you to pay off the debt sooner.

Your request to refinance a loan with Plenti will be treated as a new loan application and must therefore meet the same eligibility criteria as your original loan. We will likely request that you provide us with updated information concerning your personal and financial circumstances before assessing your refinancing request.

Sebastian Paulin

Written By Sebastian Paulin

Sebastian has worked with Australia’s leading banks and fintechs for over 12 years building better consumer experiences.

FinTech & Consumer Finance Author

Frequently Asked Questions

Can a personal loan be transferred to another person?

Personal loans cannot be transferred to another person, because these loans are determined based on your unique credit score and your list of available sources of income. Some types of personal loans, such as signature loans, require your signature and use your promise to pay as collateral

The only instance in which another person can become liable for the remaining balance of your personal loan is when you take out the loan with a co-signer or guarantor. Co-signers are every bit as legally responsible for the personal loan as the person to whom the loan is issued. While lenders need to prove they pursued the primary borrower extensively before contacting the guarantor, a guarantor is still responsible for any unpaid balances.

Does refinancing a personal loan hurt your credit?

If you’ve borrowed money at a high interest rate, you may be wondering if you should refinance your personal loan to get a lower interest rate or reduce the number of monthly payments. And rightly so – saving money by refinancing high-interest debt into lower-interest debt could be the reason you wanted a personal loan in the first place

Since refinancing means you’re paying off your old personal loan by taking on a new loan, your credit might be affected. Lenders look at new debt as a new risk and it takes time to prove you’re a responsible consumer. Don’t let this overshadow the potential upside of refinancing though – if refinancing your personal loan makes it easier for you to make your monthly payments (and ultimately pay off the loan) refinancing can positively affect your credit over the long term.

What happens when you pay off a personal loan too early?

You are able to repay a personal loan whenever you want, and repaying your loan before the scheduled due date is a great goal to have. You will pay less interest than is set out in your loan contract and you may save annual or monthly fees as well. It’s important to work out, however, whether you are able to repay your loan early without being charged prepayment penalties

At Plenti you can make extra payments at any time using BPAY or bank transfer without incurring any fees or penalties. Any extra payments you make will automatically reduce the term of your loan. This means that your monthly repayments will stay the same but you will pay less interest overall. Additionally, any extra payment will not affect the amount or timing of your regular monthly direct debit payments

Other lenders may charge prepayment penalties to deter people from closing their loans early. Always be sure that closing your personal loan early will not cost you more in penalties than you will save in interest.

Can you put personal loan repayments on hold?

If you miss multiple scheduled payments, we may engage our specialist debt collection agency to assist with recovery activity. Defaulting on a loan may affect your credit history, and this may, in turn, affect your ability to borrow in future. If you are having trouble making your repayments, you should contact us.

If you can’t keep up with repayments on your personal loan or you’re experiencing financial hardship, talk to us. We will be able to provide you with a financial hardship application and discuss your options. This is a formal process where you ask your loan provider to vary the terms of your loan contract. Here at Plenti we’ll always try to work to the best of your situation. 

If we approve your financial hardship application we will make a variation to your loan contract, for example by offering reduced monthly loan repayments for a period of time.