Tasmanians have significantly increased their use of personal loans, with volumes climbing considerably faster than in other states.
Australians took out $4.0 billion of personal loans in October 2018, down 1.7% from October 2017, according to new “original” data on personal finance commitments from the Australian Bureau of Statistics.
In Tasmania, though, volumes actually increased by 31.1%.
That was the fourth consecutive October increase for Tasmania, with volumes rising from $51.7 million in 2015 to $57.1 million in 2016 to $58.4 million in 2017 and $76.5 million in 2018.
Overall, Tasmanian personal finance commitments jumped 47.9% between October 2015 and October 2018 – compared to an increase of just 13.2% across Australia as a whole.
Volumes rose in three other states and territories between October 2015 and October 2018:
- ACT by 15.6%
- NSW by 23.4%
- Victoria by 30.9%
Volumes fell in four states and territories:
- South Australia by 1.3%
- Queensland by 2.5%
- Western Australia by 18.3%
- Northern Territory by 29.0%
RateCity.com.au research director Sally Tindall said borrowers should approach personal loans cautiously.
“In the right circumstances, a personal loan can be a useful short-term fix if the borrower can afford the repayments – especially if the alternative is running the spending through a high-interest credit card,” she said.
“However, if borrowers use personal loans to live beyond their means, they run the risk of falling into a debt trap. People should be understand how much they’ll be paying in interest over the life of the loan and set up a plan to meet every repayment.
“As with all financial products, borrowers should shop around, because interest rates and fees can vary substantially between lenders.”
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