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Which bank is best for a personal loan?

Written by

Shaun McGowan

Applying for a personal loan is something many Australians will do in their lifetime. However, before applying with your own bank, it might pay to do some research on your other options.

Specifically, is a bank the best place to get a personal loan?

If you were answering this question in 2010, there’s an 86% chance your answer would be yes. However, if you were answering this in 2018, the chance you’d visit your bank would have decreased by 14%.

Research shows that younger generations (specifically, Australian millennials) are less trusting of the old-guard financial institutions like banks, with one-third of this demographic believing banks to be untrustworthy. Source: Plenti

Security and process of getting a loan with a bank

Why are Australians choosing alternative lenders instead of the big banks?

Trust is a crucial aspect of lending on both sides, but as a borrower, there are a few factors that build or corrode this trust; the transparency of rates and repayments, approval speed, accessibility through mobile or online, and even digital support.

Despite being the younger generation of potential borrowers, this demographic values their time as much as anyone.

But everything has its benefits, and a majority of individuals are still using their bank for a personal loan despite some of the hurdles this traditional process presents. But is this the best option for getting a low-rate deal or a loan that suits your needs?

Read on to find out how you can find a lender that will show you the real rate and tell you whether you can get approved within just a few minutes.

Banks vs fintechs

Banks vs non-bank lenders in 60 seconds

Before we compare personal loan lenders, it’s worth quickly covering the three main options for getting a personal loan in 2021. Here’s an overview of these lenders you can read in 60 seconds:

The three types of lenders in Australia


  • Stable, traditional finance institutions.
  • Slow approval time and requires a lot of paperwork.
  • Assessed by an individual.
  • Reasonable rates and a reasonable deal.

Non-bank lenders

  • Lenders that use financial technology to grant loan approval.
  • Very fast approval time and a range of products.
  • The number of products can be confusing.
  • Not a lot of clarity around exact interest rates or fees.
  • Generally only requires bank statements and ID.

As you can see, each has its own pros and cons:

  • Banks are slower, but often more familiar.
  • Non-bank lenders offer fast approval with just your bank statements but aren’t always clear on rates or fees.


Getting a personal loan from the bank

A bank is a business that is licensed as an Authorised Deposit-Taking Institution (ADI) through Australia’s financial regulator - the Australian Prudential Regulation Authority.

A few of the most well-known banks in Australia include:

  • ANZ
  • Commonwealth Bank
  • NAB
  • Westpac
  • ING
  • Suncorp
  • Bank of Queensland

Banks often have strict credit policies and detailed applications for personal finance. You will generally need a stable and reasonable income, a clean credit history, and patience with the processing time of your application (up to a few weeks).

Getting a personal loan from your bank pros and cons


If you’re already a customer of the bank you’ll be familiar with their services and trust their brand. You may also receive discounts for bundling services.

You are limited to that bank’s range of loan products and may not be able to compare other options on the market.

You may be able to manage, view and pay your loan from within your existing online banking interface, as well as making automatic payments from existing linked accounts.

Banks can be conservative. If you have a bad credit history or poor documentation your application may be denied.

Big-name banks might be more trustworthy and accountable than smaller, less well-known providers.

Most banks have online application options but you’ll usually still have to physically visit their office to complete your application.

Banks have no obligation or incentive to tell you that there is another better or more suitable loan product offered elsewhere.

Apply for a loan with a non-bank lender

Non-bank lenders are financial institutions without an ADI license. They function similarly to banks and can still offer loans and other financial products.

Non-bank lenders may have less strict credit policies than major banks as well as easy online applications. These lenders often have:

Non-Bank Lender Pros and Cons


Non-bank lenders often specialise in certain types of loans, including bad credit, low doc or low deposit loans.

They cannot provide savings or checking accounts and their other products may be more limited than big banks.

They can be more lenient in assessing how much debt you can service.

Limited branches and physical presence.

They may offer shorter turnaround times and more personalised service than big banks.

Non-bank lenders are not regulated by APRA. However, they must follow the National Consumer Credit Protection Act (NCCP).

Most of their services are offered online.

Find the best personal loan deals


About want to make managing money easy and fun! By giving Australians simple tools so they can make the best decisions they can about their money.

We understand that the world of finance is complex, and offer free, extensive guides on Personal Loans, Car Loans and Business Loans, along with tools like our Budget Planning Spreadsheet to help you better manage and understand personal finance.

About the Author

Shaun McGowan from



Shaun McGowan

Shaun is the founder of and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded and Lend.