Debunking the Negative Aspect of Taking Out a Financial Loan

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There are many negative connotations attached to taking out a personal loan. These range from understandable concerns to things that are just downright myths.

We’re going to take a look at many of the negative beliefs that surround personal loans, debunk them, and explain the truth behind them and specifically look at the process of taking out a personal loan with NOW FINANCE.

What are the Perceived Negatives of Personal Loans?

Before we look at the myths that surround personal loans, we should also acknowledge that even today there is still some stigma attached to them. There’s still a belief that if you take out a personal loan there must be something wrong with you, therefore if you’re thinking about taking out a loan you keep it to yourself. We have previously written about how personal loans are more common than many people think, and how to discuss finance with friends should you be thinking about taking out a loan.

Aside from being worried about what people think, the following beliefs are widespread when it comes to personal loans:

  • The interest rate on a personal loan will always be high.
  • If I am taking out a personal loan to consolidate debts I will end up in more debt than before I consolidated.
  • Having a personal loan will ruin my credit score.

What’s the truth about all of these points?

The Interest Rate Will Always be High

If you take out a short-term loan then yes, your interest rate is likely to be much higher than if you were to take out a personal loan elsewhere. However, it is incorrect to say that interest rates on a personal loan will always be high. If a bank or other lender like NOW FINANCE display interest rates on their websites, they must also display the comparison rates. Therefore, your interest rate should fall into a range that doesn’t come as a surprise.

Debt Consolidation Can Leave Me in More Debt

The answer to this concern isn’t as straightforward as the previous one. Each set of circumstances behind someone who is looking to consolidate their debts is different, but in general:

  • Debt consolidation may help you to become debt free quicker and reduce your overall level of debt in the long-term if you do not take out any new credit facilities. This happens because a) Having a debt consolidation loan gives you a date you will finalise the loan, and b) If you have credit card debts to consolidate you will pay them off and no longer be accumulating interest each month, therefore in the long-term you will repay less than if you continued paying the minimum amount on large credit card balances provided you do not take out any further credit cards or continue to use the existing one.
  • It is up to the borrower to commit to not using existing credit lines or applying for more credit while they are repaying the debt consolidation loan. If, for example, you had credit card debts of $10,000, clear the balances to zero with a debt consolidation loan, but then use the credit cards and rack up the same level of debt, that’s down to you and is a direct consequence of your behaviour, not because the loan put you into further debt.

If, as a borrower, you use a debt consolidation for its stated purpose and don’t use it as a means of freeing up credit, it is unlikely you will end up in further debt than before you consolidated the debts.

Taking Out a Personal Loan Can Ruin My Credit Score

While some lenders may perceive a loan specifically taken out for debt consolidation purposes as a potential concern, as they may assume this means the borrower could have a history of bad credit – they won’t be able to see you have taken out a debt consolidation loan but if five accounts have been cleared and replaced by one loan repayment it will be pretty clear – in general having a personal loan on your credit file won’t ruin your credit score but will affect it. While there will be implications if you don’t keep up with the repayments, just having a personal loan isn’t going to have a negative impact if you keep up with your payments and always pay on time.

Although a personal loan in isolation won’t damage your credit score, remember that lenders will look at your total exposure to debt and current access to credit, and that whatever personal loan products you currently have will be factored into any new credit history checks.

What are the Benefits of a Personal Loan and What is the Process with NOW FINANCE?

In addition to the now debunked myths that surround personal loans, there are also several benefits that people can enjoy when taking out a loan:

  • Taking out a personal loan allows you to get the things you want in life, NOW. You don’t need to spend years saving money or panic when faced with a financial emergency, a personal loan allows you to get the money you need and repay at an affordable rate over your loan term.
  • You can benefit from a fixed interest rate and repayment period, allowing you to budget as you will know exactly what you are paying, when you are paying it, and when you will be debt free.
  • You can use a personal loan for a wide range of reasons and make a real difference in your life.

In addition to this, when you take out a personal loan with NOW FINANCE you can take advantage of these additional benefits:

  • Get your interest rate before you apply with no impact on your credit score.
  • Borrow up to $50,000 unsecured and $100,000 secured over a period of up to seven years.
  • Enjoy your own, Australia-based, personal loan advisor who will always be your contact at NOW FINANCE.
  • We’ll treat you like a person, not as a number.
  • We’re not a bank.

As well as providing these benefits, the process of applying for a personal loan at NOW FINANCE has been made as simple and as hassle-free for you as possible:

  1. Check our eligibility criteria to ensure you are able to apply for a personal loan.
  2. Get your interest rate before applying with no impact on your credit score.
  3. Complete our short application online or over the phone.
  4. Upload or send any requested supporting documents.
  5. Get your decision, and if successful you could have the money in your bank in 72 hours.

Forget the Negative Myths and Take Out a Personal Loan Today

Now that we’ve debunked the myths surrounding personal loans and told you about the positives of using our product, why not apply today? If you require any further information about our personal loans, please use the live chat function on our website, call 1300 275 669, or contact us here.

How could a personal loan change your life and help you get those things you want, NOW?


Disclaimer:  This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs.  Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.

Things you should know

Applications for finance are subject to NOW Finance’s lending and approval criteria. Terms and conditions may apply.  No establishment, account keeping or early repayment fees will apply. Charges such as default or enforcement costs may apply if you do not comply with the terms of your loan. Settlement times may vary depending on individual circumstances. Loan repayment terms range between 18 months to 7 years.  For unsecured loans you can borrow between $5,000 to $50,000 with interest rates ranging from 5.95% p.a. (5.95% p.a. comparison rate*) to 17.95% p.a. (17.95% p.a. comparison rate*).  For secured loans you can borrow between $15,000 to $100,000 with interest rates ranging from 4.45%p.a. (4.45% comparison rate*) to 15.45% p.a. (15.45% p.a. comparison rate*).

*About Comparison Rates

The Comparison Rate is designed to help you understand the overall cost of the personal loan. It combines the amount of the loan, loan term, repayment frequency, interest rate, fees and charges into a single rate to show the total true cost of the loan. The comparison rates for the NOW Finance loans are based on a loan of $30,000 over 5 years. WARNING: The comparison rates given are 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. Due to the fact NOW Finance does not charge any establishment, account keeping or early repayment fees, the true cost of the loan or Comparison Rate will always equal the interest rate quoted.


our confirmed guaranteed personalised rate may change if you provide NOW Finance with incorrect personal information or security details.  In some circumstances, NOW Finance may require further information from you in order to provide you with your guaranteed personalised rate.

NOW FINANCE is a trademark of Now Finance Group Pty Ltd ACN 158 703 612 Australian Credit Licence number 425142, as agent for NF Finco 2 Pty Ltd ACN 164 213 030