Best fixed rate personal loans*
When choosing your personal loan it’s important to check which facilities and features best meet your needs. There are a number of options to take into consideration when you’re comparing loans.
What are fixed rate personal loans?
As a customer, you have a wide choice when seeking your ideal type of personal loan – you can opt for the best variable rate or the best fixed rate personal loans. The Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) regulate the financial sector to ensure loan contract agreements are fair and transparent for you, the customer.
Why do people use fixed rate personal loans from banks?
There are several very good reasons why you might want to apply for a fixed rate personal loan:
- At the beginning of the loan period you will agree the amount you are borrowing, the period of time during which you will repay it and the amount of repayments, which will stay the same throughout the fixed term of the loan;
- Interest rates fluctuate and with a fixed rate personal loan you will avoid having to change your regular payments to reflect interest rate rises and falls;
- You can budget more exactly if you know there is a fixed amount of money leaving your account every month.
How do I choose the best fixed rate personal loan for me?
To identify the best fixed rate personal loan you will want to look first at the headline rate being advertised by the lender, and perhaps use a calculator to see what this will mean in terms of the level of your regular repayments. You will also want to check whether the lender requires the loan to be secured, for example on your home or other suitable asset, or whether the loan is being offered unsecured. If you have the capacity to secure a loan and are happy to do so this might provide more choices.
The next feature is the fees charged by the lender. Are there upfront fees as well as ongoing fees, for example? Some lenders charge upfront fees only; some charge both and some charge neither. It’s important to factor in any fees payable when you’re looking at fixed interest rates. This includes missed payment fees, early exit fees and fees associated with redraw and extra repayment facilities. Again, a calculator will soon reveal the true cost of a loan and help you decide on your best option.
What are the pros and cons of fixed rate personal loans?
When choosing a fixed rate personal loan, it's important to find one suitable for your borrowing purposes. For instance, you may be drawn to one which offers a good fixed rate of interest. Don’t be fooled by a surprisingly low fixed interest rate, only to discover that there is a raft of fees applicable for setup, ongoing administration, extra repayments, missed payments, redraw facilities and early exit. Checking out the comparison rate of a loan is a good guide, however, it’s still worth looking at any other add-ons.
* This page shows a sample of personal loans from RateCity's database, but does not compare all personal loans. It is not a recommendation or any loan. There is no 'best personal loan' for every borrower. Before taking a personal loan, it's important to consider your individual circumstances and speak to a qualified financial adviser for advice.