Do Banks Loan Money? Discover Your Options (2026)

Are you considering taking out a loan but feel overwhelmed by the myriad of options available? Whether you're looking to buy a home, start a business, or cover unexpected expenses, understanding how banks loan money can help you make informed decisions. This guide is here to demystify the process, provide you with the latest information on current interest rates, and offer actionable advice to secure the best loan for your needs.

Understanding Loans

At its core, a loan is a sum of money borrowed from a lender, which the borrower agrees to pay back with interest over a specified period. Loans can be secured or unsecured, with secured loans requiring collateral such as property or a vehicle. Unsecured loans, on the other hand, do not require collateral but often come with higher interest rates due to the increased risk to the lender.

Banks, credit unions, and non-bank financial institutions all offer varying types of loans to cater to different needs. The key is to identify the type of loan that aligns with your financial situation and goals.

Current Loan Rates and Options

As of 2026, the Australian loan market continues to evolve, offering competitive interest rates and terms. Here's a snapshot of what you can expect:

Loan Type	Interest Rate Range	Typical Loan Term
Home Loan	6.49% - 8.5%	25 - 30 years
Personal Loan	7.99% - 15.25%	1 - 7 years
Car Loan	5.75% - 9.99%	1 - 5 years
Business Loan	8.25% - 12%	3 - 10 years

Eligibility criteria for these loans can vary significantly between lenders, but generally include a stable income, a good credit score, and, in the case of secured loans, suitable collateral. With access to over 83 lenders, Esteb and Co can help you navigate these options to find the most suitable loan for your circumstances.

Steps to Secure a Loan

1. Assess Your Needs: Determine the purpose of the loan and how much you need to borrow.
2. Check Your Credit Score: A higher score can improve your chances of securing a loan with favourable terms.
3. Research Lenders: Compare the offerings from banks, credit unions, and non-bank lenders. Esteb and Co’s panel of over 83 lenders can provide valuable insights and options tailored to your needs.
4. Gather Documentation: Prepare financial statements, proof of income, identification, and any collateral documentation if applicable.
5. Apply for the Loan: Submit your application with all required documents. It may be beneficial to apply with the help of a mortgage broker to streamline the process.
6. Review Loan Offers: Examine the terms and conditions of the loan offers you receive, focusing on interest rates, fees, and repayment flexibility.
7. Accept and Finalise: Once you’ve selected the best offer, complete any final paperwork and accept the loan.

Tips and Considerations

• Understand Fees: Beyond the interest rate, be aware of any fees associated with the loan such as application fees, service fees, and early repayment penalties.
• Consider Loan Features: Some loans offer additional features like redraw facilities or offset accounts that can save you money in the long-term.
• Plan for Repayments: Ensure you have a realistic plan to meet your repayment obligations, considering potential changes in your financial situation.
• Seek Professional Advice: Consulting with a mortgage broker like Esteb and Co can provide you with tailored advice, leveraging their access to a broad range of lenders.

Frequently Asked Questions

1. What is the minimum credit score required for a loan? While there's no universal minimum, a score above 650 is generally considered favourable, though requirements vary by lender.
2. Can I get a loan if I'm self-employed? Yes, though you may need to provide additional documentation such as tax returns and business financials.
3. What happens if I miss a loan repayment? Missing a payment can result in penalties and impact your credit score. It's crucial to communicate with your lender if you're experiencing difficulty.
4. How much can I borrow for a home loan? This depends on your income, expenses, and credit history. Typically, lenders offer up to 80% of the property value.
5. Are interest rates fixed or variable? Loans can have either fixed, variable, or split rates. Fixed rates offer stability, while variable rates can fluctuate with market conditions.
6. Can I pay off my loan early? Some loans allow early repayment without penalties, but always check the terms to ensure this is an option.
7. What are the benefits of using a mortgage broker? A broker can provide access to a wide range of products and help you secure a loan that best fits your financial situation and goals.