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Variable Rate Personal Loans
Variable rate personal loans are a type of personal loan that offers a variable interest rate. 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.
Below are some advantages and disadvantages of variable rate personal loans:
Advantages of a variable rate
- If the Reserve Bank lowers interest rates, you can expect the required repayments of your variable rate loan to decrease as well
- Variable rate loans are more flexible and may allow you to make extra repayments or pay out the loan early without penalties
- A variable interest rate also does not have a fixed time frame, therefore allowing you to pay off a loan quicker and with less interest
- By making additional repayments you will be able to shorten the loan term and the overall cost of the loan
Disadvantages of a variable rate
- If the Reserve Bank increases interest rates, you can expect the required repayments of your variable rate loan to increase as well.
- As the interest rate changes, so will your repayments therefore it can make it difficult for borrowers to budget their repayments.
The table below displays some of the best variable rate personal loans on the market.
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Monthly repayments are indicative and based on advertised rate, loan amount and selected payment frequency over nominated loan term.
The comparison rate is based on secured credit of $30,000 and a term of 5 years. The comparison rate applies only to the example given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan
Consider whether this general financial advice is right for your personal circumstances. You may need financial advice from a qualified adviser. Read our detailed disclosure here.
