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Variable Rate Personal Loans
If you are looking to take out a personal loan and are considering a variable rate then you’ve come to the right place to search, compare and apply for some of Australia’s best variable interest rates on offer.
A variable rate means that the rate is not fixed and that it may change with the movements of the cash rate set by the Reserve Bank of Australia. It’s a popular choice for [personal loans] in Australia but the only way to know if it’s the best option for you is by assessing your financial situation and repayments goals.
To get you started we have listed some advantages and disadvantages of variable rate personal loans:
Advantages of a variable rate
- You’re interest rate reflects the current cash rate so if the Reserve Bank lowers interest rates, your lender can pass on the lower rate to you, which will decrease your repayments.
- If you would like the option to make extra repayments and pay off the loan early, without the penalties that fixed rate loans can incur, then consider the flexibility of a variable rate loan.
- A benefit of being able to make extra repayments and pay off the loan quicker is that it will shorten the total loan term, which means you pay less interest and save on the overall cost of the loan.
Disadvantages of a variable rate
- It’s the yin and the yang of finance, if interest rates can fall they can also rise. If the Reserve Bank increases interest rates, you can expect your lender will kindly pass on the rate increase, which will in turn increase your required repayments.
- A variable rate personal loan can make it harder for the budget conscience borrower that wants the stability of knowing their repayments won’t change. If there are interest rate changes it will affect your repayments. This is fine if the interest rates drop and lower your repayments but be prepared for an interest rate rise also.
Now that you’ve weighed up the pro’s and con’s you can start comparing some of Australia’s best variable rate personal loans below.