What is an Instalment Loan & How Do I Get One?

An instalment loan is any loan, whether personal or commercial, that is repaid over time with set, scheduled repayments. Each repayment is a portion of the amount borrowed plus added interest on the debt.

Instalment loans are common, and examples of these types of loans are:

  • Auto loans
  • Mortgage loans
  • Personal loans
  • Student loans.

Other than mortgage loans, which are sometimes variable-rate loans (where the interest rate changes during the term of the loan), instalment loans usually come at a fixed rate at the time of borrowing.

What Are the Advantages & Disadvantages of an Instalment Loan?

Instalment loans can be flexible and tailored to your specific needs, such as the loan amount and duration that best matches your ability to repay it. These loans let you borrow financing at a lower interest rate than credit cards. Here are the lists of its advantages and disadvantages.


  • Big purchases are possible
  • Payment amount usually remains the same throughout the loan term
  • Allows you to pay off the loan early to possibly save interest charges.


  • May come with high loan fees
  • Can cause damage to your credit due to late or missed payments
  • You can be tempted to borrow more than needed.

What is a Personal Instalment Loan?

A personal instalment loan is a type of loan that you will repay through scheduled instalments. A personal loan could help you fund renovations, travel, education, a car, debt consolidation, a wedding, or a combination of these things and others. Talk to the loan provider to confirm the details before signing up for a loan. Most personal instalment loans will let you repay the loan on the schedule you choose – with weekly, fortnightly, or monthly repayments.

The options you choose when it comes to repayments and interest rates should depend on your finances and how frequently the interest is compounded. Make sure you know all your information before signing up for any personal instalment loans.

What Happens If I Default on an Instalment Loan?

Loan default is what happens when you can no longer make your repayments. If you’re worried about defaulting on your instalment loan, you should try to reschedule your repayments to avoid loan default if possible.

One of the loan default consequences in Australia is that the lender can sell the assets you listed as security on the loan when you made the loan agreement to recover the money you owe them. Defaulting on an instalment loan will also drastically affect your credit score, which will make receiving other loans in the future more difficult. For the most part, your lender does not want you to default on your loan, and they will likely be willing to come to a new arrangement to prevent that from happening.

Can I Obtain an Instalment Loan with Bad Credit?

Your credit score will be assessed through various factors. Outstanding debts or late repayments, previous loan applications, and lenders you have applied for are factors to be considered when applying for instalment loans for bad credit.

Practices that harm a credit rating are:

  • Making multiple credit applications at once
  • Missing payments
  • Being careless about your bills
  • Making late payments
  • Exceeding card limits
  • Skipping payments.

To avoid being black marked, it is advisable to be responsible for your payments. If you have no credit history or have not applied for a loan previously, it can be considered a bad credit and can cause a denied application.

Ways To Improve a Bad Credit Rating?

  • Pay bills on time
  • Keep a consistent job and home address
  • Grow your savings
  • Clear and avoid debts
  • Fix errors on your credit file (contact the credit bureau)
  • Minimise credit applications

Urgent repairs, huge bills and medical costs are just some of the reasons people apply for loans. No matter what emergency you are dealing with, these are some of the loan types available at Cigno Loans that can suit your circumstances.

Trying to get a loan? We can help. Contact us today to find out more.

Disclaimer: Please be aware that Cigno Loans’ articles do not replace advice from an accountant or financial advisor. All information provided is intended to be used as a guide only, as it does not take into account your personal financial situation or needs. If you require assistance, it is recommended that you consult a licensed financial or tax advisor.



Ordered by the Federal Court of Australia

The Federal Court of Australia has found that Cigno Australia Pty Ltd (Cigno Australia) and BSF Solutions Pty Ltd (BSF Solutions) have breached the law by engaging in unlicensed credit activity and charging prohibited fees.

In the period from July 2022 to 3 October 2023, over 100,000 consumers have been lent a total of $34 million, and charged fees of over $70 million, under the ‘No Upfront Charge Loan Model’ operated by BSF Solutions and Cigno Australia. At no time has either BSF Solutions or Cigno Australia held an Australian Credit Licence.

The Court also found that Mark Swanepoel (director of Cigno Australia) and Brenton James Harrison (director of BSF Solutions) were involved in these breaches of the law.

With effect from 24 May 2024, the Court has granted permanent injunctions preventing Cigno Australia and BSF Solutions from:

  • demanding, receiving or accepting fees or charges, including amounts of loan principal, from consumers in relation to credit provided under the ‘No Upfront Charge Model’; and
  • engaging in further credit activity pursuant to the ‘No Upfront Charge Loan Model’, including by entering into new agreements with consumers, for so long as they do not hold an Australian Credit Licence.

Cigno Australia was ordered by the Court to, by 5th July 2024, send written communications to consumers who between July 2022 and December 2022 entered into agreements with Cigno Australia and BSF Solutions under the ‘No Upfront Charge Loan Model’.

The Court will later determine whether (among other things) Cigno Australia and Mark Swanepoel ought to pay a pecuniary penalty in respect of this conduct, and whether Mark Swanepoel should be restrained from carrying on a business engaging in credit activity.

Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison intend to appeal the decision of the Court and have filed an application for leave to appeal. If the appeal is successful, some or all of the orders of the Federal Court of Australia may be set aside.

Where can you get more information?

Where to go for further support

You can access legal advice in your state at: Free legal advice – Moneysmart.gov.au.

If you are experiencing trouble with debt, or money worries in general, contact:

  • the National Debt Helpline on 1800 007 007 or online chat (9:30am to 4.30pm, Monday to Friday).

If you need someone to talk to, contact:

  • Lifeline on 13 11 14 (24 hours) or their crisis support online chat or
  • Beyond Blue on 1300 22 46 36 (24 hours) or their webchat