Personal loans are on the rise among Australians. But why?
As we emerge from years of COVID restrictions in an economy hit by rising consumer prices, supply chain issues and inflation, it seems many Australians are turning to personal loans to finance their back to normal.
Personal loans are peaking, according to the Australian Bureau of Statistics (ABS data). Across all categories of personal loans, February and March of this year saw increases only beaten by the March-April-May period of 2016. February 2022 saw $2.295 billion in personal loans, the second highest number of loans high recorded in almost twenty years of available ABS data.
Perhaps the simplicity and versatility of a personal loan is proving to be an attractive solution for many Australians looking to cover the usual costs.
Australian car loans reach new heights
Recent data also suggests that Australia is experiencing some boom in car sales. The beginning of 2022 has seen a notable growth in personal loans taken out for the purchase of road vehicles.
In February 2022, $1.312 billion was loaned out for car purchases, approaching the two-decade high of $1.355 billion in March 2016. Although there was a dip in March, it was not than slight at $1.284 billion, making it the fourth highest month on record. .
This surge in auto loans comes as a bit of a surprise, as new and used car markets have faced supply issues since the start of the pandemic, leading to high demand and soaring prices.
Further still, Moody Analytics reported that used passenger car prices rose 18% in the first quarter of 2022. Australians looking to buy new cars face wait times of up to 12 months, so more people are turning to the second-hand market, which is then, in turn, seeing far fewer trade-ins and resales.
The terrible floods that hit Queensland and New South Wales earlier this year are a factor that may have contributed to the sudden increase in car loans. After the unprecedented rainfall, around 22,000 cars were written off, forcing thousands of Australians into the already undersupplied car market.
More Australians are using personal loans for household and personal assets
As inflation has hit the Australian economy and the cost of everyday items has risen, it seems more people than ever are turning to personal loans to finance big household and personal expenses.
In March 2022, $136 million in household and personal property loans, the highest on record for the personal loan specific category.
Consumer borrowing appears to have increased with the cost of living as people turn to lenders to finance essential purchases, such as home electronics and furniture.
Travel and holiday loans are slowly recovering
Borders are open and life is slowly returning to normal. Aussies are shaking off the dust and reigniting their wanderlust. As the winter chill sets in, it’s no wonder people are heading out on exotic beach vacations, but how do people pay for it?
It’s likely that many travelers are investing their savings from the COVID period, or perhaps even cashing in hard-earned credit card reward points. ABS data shows the number of Australians turning to personal loans for holidays is on the rise, but still far from pre-pandemic figures.
February 2020 was the last time travel loans maintained a fairly average rate of $36 million, but it quickly fell to $2 million in April 2020. We are seeing some recovery in March of this year, peaking in two years of 21 million dollars. .
Are you considering a personal loan? Head to our Personal Loan Hub for comparisons and guides, and check out the best personal loans in Australia this month for Mozo Experts Choice Award winners and Editor’s Choice.
Currently, the average interest rate on all unsecured personal loans in the Mozo database is 9.43%, so if you want a loan to cover immediate expenses, it might be a good idea to look for one with a low interest rate. Check out some of the best low interest personal loans below.
DISCLAIMER: The Comparison Rate combines the lender’s interest rate, fees and charges into one rate to show the true cost of a personal loan. The comparative rates displayed are calculated on the basis of a loan of $30,000 with a term of 5 years or a loan of $10,000 with a term of 3 years as indicated, on the basis of repayments monthly principal and interest payments, on a secured basis for secured and unsecured loans. basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and durations will result in different comparison rates. Costs such as withdrawal fees or prepayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may affect the cost of the loan.
^ See Mozo Experts Choice Personal Loan Awards information
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