Borrowing and credit

Learn about borrowing and credit to help you manage your money.

Before taking a loan or using credit

Taking a loan or using credit from a lender can be expensive. If you’re thinking about borrowing money, there are a few things you should think about before you decide.

Understand how it will affect your budget

Your budget is an estimate of your income and expenses for a time period. Borrowing money can hurt your budget.

If you borrow money, you have to make repayments. It’s important to manage your budget so you can make your repayments and still be able to pay for essential expenses like rent and food.

Before you borrow money, you should ask yourself:

  • am I borrowing money for a non-essential expense or something I can save for and purchase later? - if this is the case you should consider saving instead
  • is borrowing my best option? – there may be other options such as saving
  • can I afford the repayments? - borrowing money is not a good idea if you can’t afford the repayments and buy food or pay rent
  • is now the right time to borrow? - once you have a budget it’s easier to decide when you can afford things
  • how will it affect my day to day life? – make sure you have enough money left over after repayments for the other things you need

Check the terms and conditions

There are different types of loans and credit, different fees, charges and interest rates. You should make sure you know what you're signing up for before you go ahead. Find out if there are penalties for missed repayments or paying off the loan early.

Talk to an expert

Don’t feel pressured to sign a contract if you still have questions about it. Legal documents can be very hard to read. Consider talking to someone independent before making a decision or get information on free legal advice at ASIC’s MoneySmart website.

Our free and confidential Financial Information Service provides information on financial issues for all Australians. You can attend a seminar to learn more about making smart decisions with your money. Seminars are held across Australia.

Types of loans and credit

Learn more about loans, debt services or getting credit before signing up to any sort of loan or credit arrangement.

Visit MoneySmart for advice about:

  • small amount loans, also known as pay day loans - their fees and charges could be much higher than you think
  • credit cards and how to manage repayments
  • debt agreements and how they affect your ability to borrow in the future
  • rent to buy or consumer leases - if you’re thinking about renting household goods, use the Rent vs buy calculator to compare rent and buying costs
  • consolidating your loans and what to consider when you refinance
  • bankruptcy and its impact not just on your ability to borrow in the future, but on future jobs
  • loan rejection and what to do if your loan or credit application is rejected

MoneySmart has advice about no or low interest loans. These offer a much cheaper way to get household goods. There are different loans available. Find out which loan is right for you on the Good Shepherd Microfinance website.

Loan scams

Be cautious if you get a phone call or an email from a salesperson offering you a loan or credit. It could be a loan scam.

Protect yourself, your money and future finances by doing some research before you agree to anything. A scam can appear as a great deal but will cost you a lot of money if you’re not careful. Read more about identifying a loan scam on the MoneySmart website.

Paying back loans and credit

Loans and credits have to be paid back and you need to make regular repayments.

If you can’t make your regular repayment, contact the organisation immediately to negotiate new arrangements. Many organisations offer payment plans to help you pay off your debt without increasing it. If you need assistance you can find a financial counsellor on the Financial Counselling Australia website.

MoneySmart’s advice about trouble with debt can help you better manage particular debt issues, such as credit cards or bills.

Read more about managing your debt.


There’s a number of risks associated with borrowing and credit. If you take out a loan or arrange credit, it’s a good idea to protect yourself. This may mean taking the time to choose the right loan or credit provider.

There are laws that licensed lenders must abide by when lending money to you. Find out more about consumer credit laws on the MoneySmart website.

To check whether a credit provider or credit assistance provider is licensed, search Connect's Professional Registers on the ASIC website.

If you're unhappy with the decisions or action taken by a lender, the MoneySmart website also has information on how to complain. There are external dispute resolution schemes available for complaints about financial services and products.

Page last updated: 29 August 2018