Compare some of Australia's best personal loan rates

There is no one 'best' personal loan in Australia. There are a wide variety of loan options available to suit a range of Australian needs and goals. Some borrowers may define their best personal loan option as the one charging the lowest interest rate, while some may favour personal loans that offer specific value-adding features and benefits. The best-fit personal loan for you and your situation may be one that:

• Aligns with your present and future financial goals;
• Charges a competitive interest rate;
• Charges little to no fees;
• Is with your preferred financial institution;
• Offers helpful loan features (if this is important to you); and
• Is best suited to your financial situation and budget.

The easiest way to figure out what personal loan may best suit you is to do your research, shop around and compare your options carefully. 

To find the best personal loan for your financial situation, you’ll want to do your research around the different features that make up a loan. Comparing each feature carefully may assist you with finding the right product for you.

The interest rate of a personal loan is arguably the biggest factor affecting its cost overall. Lower interest rates generally mean reduced overall repayment costs, making a low-rate loan more favorable for borrowers. Keep in mind that other factors, like fees and features, can impact the cost of your loan. However, the interest rate is the most significant component.

To demonstrate the impact of interest rates on your overall repayments, RateCity has crunched the numbers on the total interest payable for a 5-year, $30,000 personal loan at two different interest rates. 

Personal loan interest rate comparison: impact on repayments

Source: RateCity.com.au. Note: Hypothetical example for demonstrative purposes of 5-year, $30,000 personal loan on two fixed interest rates of 7.00% and 12.00%. Does not factor in fees. 

As you can see, while a 4% difference in interest rates does not seem that significant, by paying a higher interest rate, you could end up paying $4,398 more in interest charges.

Now you have a deeper understanding of what features you want for your personal loan, it’s time to shop around and compare your options. There are a range of tools that may help you to filter down and narrow your personal loan search until you’ve created your ideal shortlist of options. This includes:

Comparison tables

Comparison tables, like the one on this page, may help you to compare apples with apples by showing you loan options side by side. You enter the amount you want to borrow and the loan term, and then filter down your loan options based on the features you want in a loan.

Then you can easily compare your options to see how they stack up on several factors, including interest rate and monthly repayments. You can also sort your results by the lowest interest rates or comparison rates to find the most competitive options available.

Personal Loan Repayment Calculator

To help narrow down your shortlist, use our Personal Loan Repayment Calculator to view an estimate of how much your personal loan options could cost you on an ongoing basis. This may allow you to narrow down your best option based on how repayments suit or don't suit your budget.

Comparison rates

Interest rates are not the only cost associated with a personal loan. This is where a comparison rate comes in. It is a combination of a loan’s interest rate with some of its fees and other charges, such as ongoing fees and upfront fees. A comparison rate aims to create a more “realistic” cost of the loan, based on a $30,000 personal loan over five years.

This provides a clearer picture of the total cost of borrowing over the loan's term and enables borrowers to make more informed decisions when comparing different loan options. By factoring in both the interest rate and associated fees, the comparison rate offers a more transparent representation of the true cost of a personal loan, allowing borrowers to assess and select the most suitable loan for their financial needs.

If a loan has a low advertised rate, but a much higher comparison rate, you’ll be able to identify that it likely has costly ongoing fees. If your best personal loan is one that doesn’t cost you an arm and a leg, then choosing an option with a competitive comparison rate may be worth considering. 

Real Time Ratings

Real Time Ratings is RateCity’s world-first rating system that ranks personal loans based on your individual requirements. Simply consider using the star ratings of the products in the comparison table on this page as a guide towards which loan options may be more competitive than others. 

Each personal loan is given a score out of five, based on loan costs and flexibility. It then takes into consideration your ideal loan size, loan term, borrowing purpose and if you’re securing the loan, to give you a more tailor-made result. Unlike other comparison pages which rank their products once or twice a year, Real Time Ratingsresults are calculated live, so they are up to date as possible.

Lenders typically offer borrowers more competitive interest rates who:

1. Pose a low risk of default; and
2. Have stability in their personal finances.

The eligibility criteria of a personal loan lender will differ for each provider. However, generally speaking, some of the best personal loans may be reserved for less-risky borrowers who meet the following requirements:

• Your credit score is in the 'good' to 'excellent' range
• You have a deposit of at least 20% (an LVR of 80% or less)
• You are employed full-time
• You have been working for the same company for 12 months
• You have little to no outstanding debts

The lender will analyse your personal information against their eligibility criteria to help determine not only whether you are qualified for loan approval, but can be offered a more competitive rate. For example, if you’re still in the probation period of a job or you have existing debts, you may want to hold off on applying until you’re in a more “stable” financial position in the eyes of the lender.

Documents needed for a personal loan application

To get a personal loan, you will generally need to provide the lender with the following in your application:

• Proof of identity (driver’s license, passport, etc.)
• Bank statements or utility bills to prove your address
• Income statements or pay slips to prove your income
• Bank or credit card statements to show your spending habits
• Recent tax returns or financial documents
• Details of current outstanding debt

Then, you simply need to hop online or visit your nearest branch to begin the application process.

1. Check your credit rating

You will generally need a credit score that sits in the 'good' to 'excellent' category to qualify for a personal loan. Some specialist lenders may approve customers with poor credit, but the interest rates and fees on these loans are typically much higher than average. Knowing your credit score may help you to have better understanding of which loan products and interest rates you may qualify for.

And if it’s lower than expected, you may want to consider boosting your credit score before applying. Visit RateCity’s credit score hub to access your free credit reports and credit scores within minutes through a soft credit check that will not impact your credit history.

2. Review your budget

Hop on to RateCity’s Personal Loan Calculator to get an estimate of your potential loan repayments to see how this may fit within your budget. You want to ensure you’re taking on a debt that you can afford to repay comfortably.

3. Choose your interest rate type

When you’re applying for a loan, one important decision you’ll make is choosing between a fixed and a variable interest rate. The interest on a fixed rate loan can’t be changed during the period for which it is ‘fixed’ or locked in. However, when you take out a variable rate loan, the interest rate could move up or down.

If you fix your loan, you’ll be protected from any rate hikes during the fixed period but you may not benefit if rates go down. Generally speaking, a fixed rate loan might be more manageable for some borrowers, as the repayments stay consistent. Variable rate loan repayments can fluctuate, and it’s crucial to ensure you have enough room in your budget to cover any potential hikes.

4. Compare your options

Use RateCity’s comparison tools (as listed above) to help you narrow down your shortlist of personal loan options. Check the lending criteria: Next, follow the link in the comparison tables to the lender’s website and check to see whether you meet its eligibility requirements to avoid having your application rejected.

5. Prepare your application Now you’ve chosen a personal loan, it’s time to complete your application. This is when you’ll want to gather the required documentation to ensure a smooth application process. Depending on your lender, you may be able to submit an application online, via its app, or simply apply in branch.

6. Submit your application and wait for approval

Congratulations, you’re ready to submit your application! It may take your chosen lender a few hours up to several business days to offer you a response. Keep in mind that making multiple personal loan applications will hurt your chances of approval, and any loan rejections will affect your credit score. Try to only apply to one personal loan at a time. Then, if you are rejected for one, take some time to review and improve your personal financial situation and credit history before applying again.