Planning a big family purchase? See the top Australian personal loan deals for May 2024

Yes, there are several ways in which you can get a loan together with family members. 

The first way is to be a joint applicant. This is common for couples or spouses who want to make a large purchase and it is harder for one salary to cover the full estimated repayment so both salaries, assets and liabilities are taken into account. 

The second way to get a loan with a family member is for one party to become a loan guarantor. This is usually done when a parent will go guarantor on their child’s loan such as for the purchase of a car. There is a financial risk in doing this, so if you are the parent this decision should not be taken lightly, especially if you are putting up your own home or car as collateral for the loan. If your child defaults on the loan, the bank or lender will go after you / your assets for repayment. 

Some personal loans do come with conditions where they need to be used for a specific purpose such as a green home improvement loan where you’ll be required to show proof of purchase. 

You’ll usually be required to state the loan purpose when you apply for the loan but for most general purpose unsecured personal loans as long as you are prepared to pay the borrowed amount back with interest and each family applicant qualifies there isn’t a clear cut rule for what you can use a personal loan for.

The type of interest rate that will be best will depend on your family’s financial circumstances. If you need to know exactly how much they have to pay each month then consider opting for a fixed rate. If you want to be able to benefit from any possible rate drops over the loan period a variable rate loan might suit you more. But don’t forget rates can also go up so it is best to consider this when you are deciding on the loan term.

The best loan term for you will depend on a number of factors such as how much you want to borrow and your family’s income. The issue with selecting a loan term that is too short is that you could get into financial stress and miss a payment (which would then affect your credit score). But the longer the loan period, the more money you’ll have to pay in interest and fees. 

Most lenders these days allow you to pay out loans early without penalty so it is best to select a loan term that you can comfortably meet repayments and whenever possible make more than the minimum monthly payment so that you can pay it back as fast as possible.

Before applying for any loan, make sure that you and any family member who is applying meet the eligibility criteria. 

Some of the most common eligibility criteria includes: 

• 18+ years of age
• Reside in Australia
• Hold Australian citizenship or an eligible visa
• Meet minimum income (each lender will have different income level benchmarks)
• Pass a credit check