How to manage loans and credit
Learn about borrowing and credit to help you manage your money.
Before you accept a loan or credit
Spending money you don’t have can be expensive. There are things you need to think about when taking out a loan or using credit. You should ask yourself if:
- it’s something you really need right now – can you save up and buy it in full later
- it’ll make your budgeting tight – you could struggle to cover bills like rent or food
- paying it will stop you from saving or having money for emergencies
- there are other ways to get or pay for what you want.
There’s safe and affordable finance out there. Check if you can get a no interest or low interest loans loan from Good Shepherd Microfinance.
Before you apply for a loan or credit, use the Australian Securities & Investments Commission’s (ASIC) MoneySmart simple money manager. It can help you work out your budget.
If you do apply for a loan or credit, always check the terms and conditions. There will be things lenders won’t mention up front. Don’t sign a contract if you still have questions.
Think about talking to someone before you take out a loan or credit. You can also find out about free legal advice on the MoneySmart website.
Types of loans and credit
There are many types of loans and credit with different fees, charges and interest rates.
Visit the MoneySmart website for advice about:
- pay day loans – small amount loans where the fees and charges could be much higher than you think
- credit cards – understand how they work and how to manage them
- debt agreements – they may stop you from borrowing in the future
- rent to buy or consumer leases – use the Rent vs buy calculator to compare rent and buying costs
- buy now, pay later services – how they work
- consolidating loans – what to consider when you refinance
- bankruptcy – its impact on your ability to borrow and on future jobs
- loan rejection – what to do if lenders don’t accept your loan or credit application.
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 lender.
There are laws that licensed lenders must follow when lending money to you. Find out more about consumer credit laws on the MoneySmart website.
To check for a licensed credit provider or credit assistance provider, search Connect's Professional Registers on the ASIC website.
If you're unhappy with a lender in any way, the MoneySmart website has information on how to make a complaint. There are external dispute resolution schemes available for complaints about financial services and products.
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 loan scams on the MoneySmart website. It can teach you what to look out for and be careful of.
Tips and tricks
We have information and tools you can explore to take charge of your money.
If you’re having trouble paying a bill, loan or mortgage, speak to your bank or service provider. Most will have a hardship team who can help. They may be able to suspend, reduce or waive debt repayments depending on your situation.
MoneySmart’s advice about trouble with debt can help you better manage particular debt issues, like credit cards or bills.
If you run into problems with debt, the National Debt Helpline has a free, confidential and independent financial counselling service.
It’s worth getting free expert advice to get a clear picture of your finances. You can use the find a counsellor map on the Financial Counselling Australia website to find help in your area.
If you’re a farmer or small rural business you can speak to a rural financial counsellor. Read about the rural financial counselling service on the Department of Agriculture and Water Resources website.
Borrowing money to buy something isn’t always bad. Compare the cost of renting or buying essential items with the Rent vs buy calculator.
Read more about identifying financial scams on the MoneySmart website.
Our free and confidential Financial Information Service has information on financial issues for all Australians.
Page last updated: 3 May 2019